Jio Financial shifting focus from unsecured to secured

Jio Financial Service (JFS) had earlier planned to concentrate on unsecured lending. Now it has decided to shift focus towards secured loans, including leasing. (It has also set up a 100% leasing subsidiary to undertake lease operations)

“Large opportunity in the secured lending space. Noticeable market reaction vis-à-vis unsecured lending leading to calibrated approach towards unsecured products,” the company said in its Q3 results investor presentation.

  • Banks and NBFCs are going slow on unsecured consumer lending after RBI increased risk weights on unsecured loans last year.
  • In the secured lending space,  JFS focus would be on DaaS (device-as-a-service), which involves leasing of airfiber, phones and laptops along with supply chain financing, loan against shares, and home loans.
  • According to Jio’s investor presentation, the Company believes that the DaaS model has lower risk due to asset ownership and also helps increase cross-sell opportunities.
  • It has completed a sandbox (testing) for consumer durable loans and personal loans. Loans against shares or mutual funds, and home loans are in the pipeline, while the capability for unsecured and consumer durables products is already built up.
  • The Company has also filed an application for conversion from an NBFC to a core investment company (CIC), according to the company presentation. A CIC is more like a holding company.
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