Nervous times ahead for NBFCs and Fintech companies

The reason? I’ll keep it simple - Entry of Jio Financial Services (JFS)

Check this post on the demerger announcement of Reliance Industries where the company announced the plans to list Jio Financial Services (JFS)

I read Macquarie’s latest report on Jio financial services and here are some highlights:

5th Largest Financial services company

  • On the assumption that 6.1% of Reliance Industries will be held in JFS, It will be the 5th largest financial services company in the country

Reliance’s Distribution footprint is second to none

  • With 15000 stores, Reliance retail is by far the largest retailer in all the categories that it is in (consumer electronics, grocery/supermarkets, fashion)

Being able to secure loans at a lower rate than almost all of its peers (except banks), There is a real chance of Jio trying to challenge the MOAT of Bajaj Finance

  • With NBFCs already losing market share to pvt banks in consumer durable financing, Jio’s arrival will make things even more difficult for them

Banks are safe from disruption - FOR NOW

  • RBI isn’t too keen on giving banking licenses to corporate groups — That keeps JFS away from banking space for now and therefore, banks can still enjoy the advantages of low cost deposits and JFS also can’t offer any transaction banking services and other products which banks are allowed to offer.

  • Unsecured Lending is the space to watch out for

With all the time consuming factors like having a physical presence, setting up a collection and repossession infrastructure that is required in secured lending (Housing and Vehicle finance), JFS may most likely focus on the unsecured lending as that is where the growth has been for the last few years more than secured lending.

Insurance, Mutual Funds and Broking


With Capital not being an issue to enter the business, It will be interesting to see how JFS plans to disrupt the above mentioned industries.

Off late, IRDA has been very open to allow entry of new players into the insurance market

As Life insurance business takes time to build and scale, General insurance is most likely the space to target the incumbent players as the business is short term in nature.

The top-5 private sector players in the life and general insurance market have closer to 60-70% market share among private sector players. However, the rest of the market is fairly fragmented and JFS can up the ante and gain quite a good presence.

Mutual Funds and Broking

  • Bank led MFs are ruling the MF industry (SBI MF, ICICI, HDFC MF) despite the presence of corporate houses.(Tata, Birla, Nippon MF)

  • Top 6 players are enjoying 60% market share

In broking, New age broking companies have disrupted the industry which was led by bank led brokers.

The overall profits of the sector are 5800 crore per annum.

Broad Summary

Although the opportunities are many, It would be interesting to see which spaces in the financial world are actually disrupted by JFS and what changes would that disruption bring to the industry as a whole.


Reliance has become one of those ‘too big to fail’ kind of companies.

Reliance is the largest private company in India, 17 lac crore company.

Inappropriate emoji. Why sad for that :roll_eyes:

So clicked wrong emoji :grin:

not much disruption as company can’t give zero interest loans like how jio did

That would be a ‘game ender’.

I agree, when Jio came into the market, there were very few players in the huge telecom market space, and they could disrupt the market but Fintech and NBFC finance is different ball game, yes they might take up a market share from existing operators but I do not feel they will disrupt this space.

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It’s way more for Adani than ambani. His expansion is still uneasy for many. Somehow things don’t add up.

Problem is most stock market crash are the ones starting a banking crisis and kills all deposits and things start getting serious.

Adani’s company is more like ‘too big, probably going to fail’ kind of company.

Only after we gain some experience and witness some things, we can say that this looks like that from the past, so this might go this way, here too we could be wrong. Otherwise what we think may not happen, and market or a group or a stock will keep on surprising us.

That is the reason i said probably, not definitely. May or may not. :no_mouth: