Jio Financial Services Ltd, the financial services arm of Reliance Industries Ltd, plans to use its newly-launched marketplace to sell products that are otherwise not within its risk appetite, managing director and chief executive officer Hitesh Sethia said on Monday.
“For example, we offer personal loans through half a dozen lenders on our marketplace. We are not licensed to issue credit cards, and so we have over 50 credit cards (on the marketplace); business loans are something we are starting to offer,” Sethia said over phone.
In February, Jio Financial Services launched its marketplace for financial products through the JioFinance app. It said the marketplace brings together products from Jio Financial Services group companies and other financial firms on a single platform. These include home loans, loans against securities, personal loans, credit cards, insurance, UPI services, fixed deposits, digital gold, tax filing and planning services and savings accounts.
The app is managed by Jio Finance Platform and Services, a wholly owned subsidiary of . Meanwhile, Jio Financial Services is present across lending, payments, investments, insurance through subsidiaries and joint ventures.
“So, you will start seeing an expansion of the marketplace set of lending products, which will be complementary to our (non-banking financial company) products,” said Sethia.
Sethia said the marketplace will coexist with the inhouse underwriting capabilities and would even be complementary in many cases.
“I would not be surprised even if they compete, because it’s not that (we are present in) every home loan across all segments. We are not present in affordable housing, as an example, we are not present in the mid- to lower-subprime segment as well. Now, that is something which we will evaluate whether we should offer through the marketplace,” said Sethia.
The company reported a consolidated net profit of ₹272 crore in the March quarter, down 14% from a year ago, on the back of rising expenses. Jio Financial Services’ total expenses for the quarter rose to ₹720 crore, more than quadrupling year-on-year.
“If you look at our topline, it has grown rapidly. Culturally, we have made sure that every business looks at unit economics. Therefore, as we scale the top line, the bottom line has to grow,” said Sethia. “There are some expenses which we call direct expenses, which are necessary for growth. For example, interest income will grow only when we end up leveraging the balance sheet, borrow more and therefore, grow. Therefore, interest expense will grow in line with interest income.”
The company’s lending business Jio Credit saw assets under management (AUM) reach ₹25,711 crore as of 31 March, over 2.5 times growth from a year ago. Its asset management business— Asset Management—reported an AUM of ₹15,218 crore.
However, analysts pointed out that the transaction processing volumes for its payments arm Jio Payment Solutions fell 8% sequentially to ₹15,000 crore, as against ₹16,300 crore in the previous quarter. Sethia said this decline does not show crimped consumption and said it was still “still stable and solid”.
“We are just seeing that some of our competitors are offering very competitive rates and our customers then definitely have choices,” said Sethia.
According to analysts at Motilal Oswal, Jio Financial Services reported a mixed performance, with the NBFC segment scaling well and assets crossing ₹25,000 crore, but other segments witnessed slower traction, while the overall profitability remained impacted by continued investments in new businesses and the hit on the treasury book amid macro volatility.
“Jio Financial Services offers a compelling long-term runway for growth, supported by the breadth of its financial services platform and multiple embedded value-creation levers,” Motilal Oswal said in a note on 18 April.