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Mukesh Ambani-led Jio Financial Services (JFS) has decided to acquire the rest 17.8% stake in Jio Payments Bank of the State Bank of India (SBI) for ₹104.5 crore ($12.03 million). This will turn Jio Payments Bank into a wholly owned subsidiary of JFS, consolidating its presence in the financial services space.
Acquisition Details
JFS now owns an 82.17% interest in Jio Payments Bank, a joint venture which was initiated between SBI and JFS in 2018. Upon the purchase of an additional 7.90 crore equity shares at a price of ₹13.22 per share, the valuation of Jio Payments Bank has gone up to about ₹586 crore.
The acquisition has been approved by JFS’s board but is subject to regulatory clearance from the Reserve Bank of India (RBI). The company expects to finalize the deal within 45 days of receiving RBI’s approval.
Strategic Importance of the Deal
Because JFS transitioned to becoming an independent player in August 2023, it has been actively building up its financial services portfolio. With the acquisition of Jio Payments Bank, there is expected to be:
- Total Operational Control: JFS would have full control over the direction of the payments bank’s future.
- Digital Banking Expansion: JFS will look to increase its footprint in India’s digital banking space, competing with incumbent players like Airtel Payments Bank, Fino Payments Bank, NSDL Payments Bank, and India Post Payments Bank.
- Integration with Jio’s Ecosystem: Jio Payments Bank’s offerings could be integrated with Jio’s large telecom and digital ecosystem without any hassle, giving it a strong competitive edge.
Market Reaction and Financial Performance
After the announcement, JFS shares jumped, closing 2.64% higher at ₹206.25, with intraday high reported at ₹208. The move is viewed by analysts as a long-term positive for JFS, strengthening its position in the digital payments space.
JFS has been posting consistent profits, with a ₹295 crore consolidated profit in Q3 FY24, along with a sharp increase in Assets Under Management (AUM) to ₹4,199 crore.
Ever since it was launched in April 2018, Jio Payments Bank has acquired 1.89 million CASA (Current Account Savings Account) customers as of December 2024.
Jio Payments Bank operates under India’s payments bank framework, which allows it to accept deposits of up to ₹2 lakh per account while offering basic banking services through physical branches and business correspondents (BCs). However, as per regulatory guidelines, it is not permitted to engage in lending activities.
With the takeover of Jio Payments Bank in its entirety, JFS would anticipate inventure new financial services propositions with possible synergies with Jio’s digital platforms and planned mutual fund venture with BlackRock.
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