Bank of America to Invest $1.9 Billion in Jio Credit for up to 49.9% Stake
In a major expansion move within India’s financial sector, Bank of America Corporation, through its wholly owned subsidiary NB Holdings Corporation, has agreed to acquire up to a 49.9 per cent stake in Jio Credit for approximately ₹18,268.22 crore (around $1.9 billion).
What Happened
The transaction involves a preferential allotment of equity shares and warrants. Under the agreed terms, Bank of America will initially secure a 26.5 per cent stake in Jio Credit, with the option to scale its shareholding up to 49.9 per cent upon the exercise of warrants. The remaining stake will be retained by Jio Financial Services, the holding company of Jio Credit. The completion of the deal remains subject to necessary statutory and regulatory approvals.
This deal marks the second-largest investment in India’s non-banking financial company (NBFC) sector, reflecting growing institutional backing for non-bank lending institutions.
Key Highlights
- Deal Structure: NB Holdings Corporation will invest approximately ₹18,268.22 crore ($1.9 billion) for an initial 26.5 per cent stake, expandable to 49.9 per cent through warrants.
- Rapid Portfolio Growth: Established two years ago, Jio Credit has expanded its assets under management (AUM) past ₹30,000 crore, standing at ₹30,667 crore as of June-end.
- Branch Network: The lender currently operates across 24 locations in 18 Indian cities.
- Asset Composition: Home loans, corporate loans, and SME loans constitute 90 per cent of the company’s current AUM. The firm also provides loans against property and loans against shares.
- Growth Funding: The fresh capital infusion of $1.9 billion is anticipated to support Jio Credit’s business operations and product expansion for at least two years.
Why This Matters
The investment underscores Bank of America’s broader international focus on India. Bank of America Chair and Chief Executive Officer Brian Moynihan highlighted that India remains one of the world’s vital growth markets and that the investment reflects ongoing confidence in the country’s economic future. Additionally, Mukesh Ambani has served on Bank of America’s 13-member Global Advisory Council since 2013.
The broader NBFC segment has been expanding rapidly compared to traditional banking. Over the past year, retail lending by NBFCs grew 20 per cent to reach ₹25 trillion, outpacing the 16 per cent retail loan growth recorded by commercial banks, which stood at ₹71 trillion.
What to Watch Next
The execution of the agreement will proceed following regulatory clearances. Jio Credit aims to expand its offerings into new lending categories in the near term. The company has so far avoided unsecured loans—following increased regulatory risk weights across the industry—and gold loans, which have seen significant growth in both bank and non-bank sectors.
As regulatory frameworks shift to a size-linked structure requiring entities with ₹1 trillion in AUM to meet upper-layer compliance and list on stock exchanges within three years, market observers will monitor Jio Credit’s ongoing expansion toward those thresholds.
Frequently Asked Questions
What is the total value of the Bank of America-Jio Credit deal?
Bank of America subsidiary NB Holdings Corporation is investing approximately ₹18,268.22 crore (around $1.9 billion) to acquire up to 49.9 per cent of Jio Credit.
What is the current loan portfolio of Jio Credit?
As of June-end, Jio Credit held an AUM of ₹30,667 crore. Around 90 per cent of its book comprises home loans, SME loans, and corporate lending, alongside loans against property and shares.
Does Jio Credit offer gold or unsecured loans?
No, Jio Credit has not expanded into unsecured lending or gold loans at this stage.
Source: Business Standard