Bank of America to pick 49.9% stake in Jio Credit for Rs 18,268 crore

Bank of America has agreed to acquire up to 49.9 percent stake in Jio Credit, the non-banking financial company arm of Jio Financial Services, for Rs 18,268 crore (about $1.9 billion). The deal, announced on Wednesday, marks one of the biggest foreign investments in India's shadow banking sector in recent years.

The investment will be structured as a joint venture between the US banking giant and Jio Financial Services. Both companies have signed a definitive agreement, with Bank of America taking a minority but substantial share in the lending unit.

What Jio Credit does

Jio Credit is the NBFC arm of Jio Financial Services, which was demerged from Reliance Industries in 2023. The company focuses on consumer and merchant lending, leveraging the vast Jio ecosystem that includes telecom, retail, and digital services.

The NBFC has been building a digital-first lending platform, aiming to disburse small-ticket loans to individuals and small businesses. Its parent, Jio Financial Services, is listed on Indian stock exchanges and has been expanding its financial services footprint since its demerger.

Why this deal matters

For Bank of America, this investment marks a significant expansion in India's credit market. The US lender already has an investment banking and markets presence in the country, but this joint venture gives it direct exposure to the fast-growing retail and MSME lending space.

For Jio Financial, the partnership brings global banking expertise and capital to scale its lending operations. The deal also signals continued foreign interest in India's financial services sector, which has seen a surge in private credit and digital lending activity.

Industry watchers note that the valuation implies a strong premium for Jio Credit, reflecting the strategic value of its distribution reach and data capabilities.

Structure of the deal

The agreement allows Bank of America to acquire up to 49.9 percent of Jio Credit, with the option to potentially increase its stake over time. The investment will be made in tranches, subject to regulatory approvals.

Jio Financial Services will retain majority control of the NBFC, ensuring that the joint venture operates within the existing group framework. The transaction is expected to close in the coming quarters, pending clearance from the Reserve Bank of India and other regulators.

Neither company has disclosed the specific timeline for the stake purchase, but officials have indicated that the process has already begun.

What it means for the NBFC sector

The deal comes at a time when India's NBFC sector is witnessing consolidation and increased foreign participation. Large global investors are betting on the country's credit growth story, driven by rising incomes, digital adoption, and a push for financial inclusion.

Bank of America's entry into Jio Credit could set a template for other foreign banks looking to partner with Indian conglomerates in the lending space. It also underscores the growing importance of NBFCs as intermediaries in India's financial system.

Analysts will be watching how the joint venture navigates regulatory requirements and competitive pressures from established players like Bajaj Finance and newer fintech lenders.

The coming months will reveal how quickly the partnership scales operations and what products it prioritises, as both companies work to close the deal and integrate their teams.