When Will Jio Credit Reach AUM Level Of Rs 1 Trillion?

'We are staying away from making forward-looking statements on when we will reach ₹1 trillion, etc. But growth will be rapid; it’s only a matter of time.'

Jio Credit, the non-banking financial company (NBFC) arm of Jio Financial Services, will focus on secured lending products and enter unsecured segments in due course, once it reaches a certain critical mass, said Managing Director and Chief Executive Officer Hitesh Sethia in an interview with Subrata Panda and Manojit Saha/Business Standard in Mumbai.

Jio Credit was the growth engine in FY26. Will this sustain in FY27 as well?

Our base is still small compared to the overall market and our own aspirations. Thankfully, capital is not a constraint for us.

In lending, once you have capital, along with distribution and strong risk guardrails, growth can be fairly rapid. We believe growth will continue to be robust.

The market remains solid, particularly in the segments we operate in, such as home loans, loans against shares, and loans against property.

Unlike many institutions that started with unsecured lending and pivoted to secured lending, we have largely taken a contrarian call.

Given our brand, capital, and ecosystem advantage, we want to start with secured lending, build a strong balance sheet, and thereafter gradually expand the risk appetite in line with the growth of our balance sheet and P&L.

Regulatory Compliance and Growth Projections

The Reserve Bank of India (RBI) has proposed ₹1 trillion as the eligibility for upper-layer NBFC classification. When is Jio Credit expected to reach that AUM level?

Whether upper or middle layer, we are already following the highest standards of corporate governance that a bank of or an upper-layer NBFC follows.

For us, that is only a matter of classification by the RBI, which we respect and will adhere to.

As I said, once capital, risk guardrails, and distribution are in place, those numbers are only a function of outcomes.

We are staying away from making forward-looking statements on when we will reach ₹1 trillion, etc. But growth will be rapid; it’s only a matter of time.

Brokerages suggest that Jio Financial Services could be classified as “upper layer” NBFC. What is your view?

Right from day one, we are clear that, in terms of governance standards, we want to follow those of banks or top NBFCs, which is what we are doing.

For us, whenever the central bank classifies us as an upper-layer entity, it will be a smooth transition.

We are already adhering to all the required norms, including those related to board independence and full operating discipline.

Future of Unsecured Lending and Product Diversification

When will you look to start unsecured lending in the retail space?

Not just yet, I will put it this way -- but in due course, we will keep evaluating. Right now, we feel there is enough runway.

Once we reach a certain critical mass, we will expand our risk appetite, taking into account all market dynamics. These are margin-accretive businesses.

We are building an institution that needs to be relevant for the next decade, two decades, and three decades.

Therefore, building a solid P&L with strong risk-absorption capacity is very vital for us.

At present, being an AAA-rated NBFC, our cost of funds is around 7 per cent, which is best-in-class.

As a result, our margins -- even in secured lending -- are not trivial. In fact, we have reported NIMs north of 3 per cent.

Of course, as leverage increases, we expect NIMs to move more in line with the market. However, we are able to sustain these NIMs due to our advantage on the cost-of-funds side.

Is microfinance an area that you would look at?

That is not something which is in the realm of evaluation right now.

You have mentioned that you would look at product diversification...

We launched our Neural Agentic Marketplace in February. At present, to service our customers, we offer a set of unsecured lending products.

We also have a suite of credit cards; however, as an NBFC, we cannot issue credit cards since the RBI does not grant those licenses.

So, we currently have around 50 credit cards, half a dozen unsecured loan products, and business loans in the pipeline.

To meet customer needs, we will expand through the marketplace in areas where we do not yet have a risk appetite.

Where we do have a risk appetite, we will continue to operate through our NBFC. For now, we intend to stay focused on our existing product set and go deeper.

We plan to be present in the top 20 cities; currently, we are in 18 cities with 24 offices.

Distribution will expand slightly, and we will continue to evaluate every quarter. As and when new products are launched, you will certainly be among the first to know.

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Inorganic Growth and Insurance Ventures

Are you looking at inorganic growth opportunities?

We continue to evaluate all opportunities. As of now, there is nothing concrete, and it is not something we are proactively pursuing.

The organic opportunity itself is vast enough. Honestly, organic growth gives us a significant advantage by allowing us to stay away from legacy tech stacks.

Inorganic opportunities can provide an immediate boost to growth, but they may also bring legacy tech stacks, which come with their own transformation challenges and inherent disadvantages. Therefore, our bias has been slightly towards organic growth.

Jio Financial Services has partnered with Allianz for reinsurance. When can be similar ventures for life and general insurance?

On reinsurance, we received regulatory approvals and the licence in March. Effectively, I would say the business started towards the end of March, or April 1.

The CEO, the team, and the board are in place. If you consider India’s growth trajectory towards 2047, and the fact that insurance remains an underpenetrated sector, reinsurance plays a critical role by providing capacity to insurance companies.

Therefore, this is a very strategic play for us. We are quite excited about it, and the start has been good -- that’s all I can say for now.

From this quarter, we will see some of these numbers being reported in reinsurance.

As far as primary insurance is concerned, we announced in July last year that we have a non-binding agreement with Allianz to enter into general and life insurance. We are working towards that.

The next step is to move to a binding agreement, which we are pursuing quite aggressively.

Once that is done, we will begin the regulatory process for licences, and the business can be launched after receiving the regulator’s approval.

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BlackRock Partnership and AMC Growth

The asset management venture with BlackRock is largely run by Blackrock. Do you see a need for course correction towards greater involvement of Jio professionals with deeper local market insights?

BlackRock is the world’s largest asset manager.

The team assembled here, starting with the board, comprises individuals with local India expertise.

Second, the entire management team largely has local India experience.

The CEO is of Indian origin but deputed from BlackRock, which was and continues to be the right approach, as it allows us to benefit from the best of BlackRock.

In terms of growth, we are the fastest-growing AMC. If you look across AMCs, within nine months, we have reached about ₹15,000 crore.

In fact, average AUM in the last quarter has increased to ₹16,000 crore. This is a relevant metric, as income and the stability of customer churn are measured through average AUM rather than just closing AUM.

Equally important, as the strength of the Jio brand comes into play, more than 20 per cent of our customers are first-time investors, and 40 per cent are from beyond the top 30 cities.

At this stage, we have taken a conscious decision to go digital-direct. All of this growth has been achieved without mutual fund distributors, as all our offerings so far have been direct plans -- none are regular plans.

This is reflected in our SEBI filings across the 13–14 products we have launched. Over time, we will evaluate all distribution channels.

We have a robust pipeline -- GIFT City initiatives are underway, with certain approvals already in place.

We are progressing towards launching a GIFT City fund to enable Indians to invest in overseas markets. At this point, we see no need for any course correction in management.

We will, however, continue to challenge the team and raise the bar, as we do across all businesses.

There is no distinction like America, India, or BlackRock -- we are fully aligned, and the local management team is empowered. 

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Feature Presentation: Rajesh Alva/Rediff