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Bank of America’s proposed nearly $2 billion investment in Jio Credit could further change the competitive landscape for India’s non-banking financial companies (NBFCs), as more global lenders choose to invest in local financial platforms instead of setting up their own businesses, according to Abizer Diwanji, Founder of NeoStrat Advisors.
Bank of America is set to invest around ₹18,268 crore through equity shares and warrants to acquire up to a 49.9% stake in Jio Credit, the wholly owned NBFC lending subsidiary of Jio Financial Services. The deal values Jio Credit at around $3.8 billion. The US lender will initially invest around ₹6,613 crore for a 26.5% stake, with another ₹11,600 crore-plus expected through warrant conversion, subject to regulatory and statutory approvals.
Diwanji said the deal follows a broader trend of foreign banks entering India through investments in domestic financial institutions. Sumitomo Mitsui Banking Corporation (SMBC), Emirates National Bank of Dubai (NBD) and Mitsubishi UFJ Financial Group (MUFG) have made similar moves, while Bank of America’s entry into Jio Credit is particularly significant because of its focus on digital lending.
“What we are now seeing is Bank of America, which is effectively coming in in Reliance Jio on the credit side. And that's more interesting because it's coming on the digital lending platforms,” Diwanji said.
The Jio Credit board will have equal representation from Jio Financial and Bank of America, while Jio Credit will continue to be consolidated under Jio Financial’s reporting structure. Diwanji believes fresh capital could help local financial institutions expand faster and reduce one of the biggest constraints for NBFCs — access to capital.
“For once now local institutions will be awash with capital. It's been the biggest concern of the NBFC sector,” he said.
According to Diwanji, Jio Credit's access to the wider Jio digital ecosystem means it may not need to rely heavily on co-lending structures. Instead, the Bank of America partnership could provide global visibility and help Jio Credit access overseas funding markets.
“Along with global visibility, it actually gives them the ability to raise much more capital, Tier 2 capital, high corporate bonds from overseas markets, which will enable it to grow significantly and leverage its own capital base,” Diwanji said.
Jio Credit is a digital-first NBFC focused largely on secured lending across retail, commercial and supply-chain finance. In around two years of operation, it has built assets under management of more than ₹30,600 crore.
Diwanji said the partnership is also significant because it brings foreign capital to segments such as small and medium-sized enterprises (SMEs) that need greater access to credit.
“For once, foreign banks are coming into the underbelly of India. Where is the credit of Jio Credit going? It's going to the underbelly, the small and medium-sized enterprises (SMEs), and that sector of India which really needs the credit,” he said.
The development could also increase competition across the broader financial sector. Diwanji expects the traditional distinction between banks and NBFCs to become less clear as institutions gain greater access to capital.
He does not believe other large NBFCs necessarily need to find global joint venture partners. Instead, the key requirement is adequate capital to support growth. Companies that can access capital on competitive terms could continue expanding without necessarily bringing in a foreign partner.
On regulatory approvals, Diwanji expects the process to focus on governance, controls, board representation and accountability rather than becoming a major hurdle. Since Bank of America is already a regulated bank in the US, he expects Indian regulators to conduct the required checks but does not foresee significant regulatory problems.
Watch the full conversation here
“For the regulator, if you are a regulated bank in an overseas jurisdiction and there is a clear report from that regulator, in this case the Fed, if there is a clear line to say that there is no issues with Bank of America, which I doubt there will be, regulatory issues in India are a matter of process,” he said.
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Bank of America is set to invest around ₹18,268 crore through equity shares and warrants to acquire up to a 49.9% stake in Jio Credit, the wholly owned NBFC lending subsidiary of Jio Financial Services. The deal values Jio Credit at around $3.8 billion. The US lender will initially invest around ₹6,613 crore for a 26.5% stake, with another ₹11,600 crore-plus expected through warrant conversion, subject to regulatory and statutory approvals.
Diwanji said the deal follows a broader trend of foreign banks entering India through investments in domestic financial institutions. Sumitomo Mitsui Banking Corporation (SMBC), Emirates National Bank of Dubai (NBD) and Mitsubishi UFJ Financial Group (MUFG) have made similar moves, while Bank of America’s entry into Jio Credit is particularly significant because of its focus on digital lending.
“What we are now seeing is Bank of America, which is effectively coming in in Reliance Jio on the credit side. And that's more interesting because it's coming on the digital lending platforms,” Diwanji said.
The Jio Credit board will have equal representation from Jio Financial and Bank of America, while Jio Credit will continue to be consolidated under Jio Financial’s reporting structure. Diwanji believes fresh capital could help local financial institutions expand faster and reduce one of the biggest constraints for NBFCs — access to capital.
“For once now local institutions will be awash with capital. It's been the biggest concern of the NBFC sector,” he said.
According to Diwanji, Jio Credit's access to the wider Jio digital ecosystem means it may not need to rely heavily on co-lending structures. Instead, the Bank of America partnership could provide global visibility and help Jio Credit access overseas funding markets.
“Along with global visibility, it actually gives them the ability to raise much more capital, Tier 2 capital, high corporate bonds from overseas markets, which will enable it to grow significantly and leverage its own capital base,” Diwanji said.
Jio Credit is a digital-first NBFC focused largely on secured lending across retail, commercial and supply-chain finance. In around two years of operation, it has built assets under management of more than ₹30,600 crore.
Diwanji said the partnership is also significant because it brings foreign capital to segments such as small and medium-sized enterprises (SMEs) that need greater access to credit.
“For once, foreign banks are coming into the underbelly of India. Where is the credit of Jio Credit going? It's going to the underbelly, the small and medium-sized enterprises (SMEs), and that sector of India which really needs the credit,” he said.
The development could also increase competition across the broader financial sector. Diwanji expects the traditional distinction between banks and NBFCs to become less clear as institutions gain greater access to capital.
He does not believe other large NBFCs necessarily need to find global joint venture partners. Instead, the key requirement is adequate capital to support growth. Companies that can access capital on competitive terms could continue expanding without necessarily bringing in a foreign partner.
On regulatory approvals, Diwanji expects the process to focus on governance, controls, board representation and accountability rather than becoming a major hurdle. Since Bank of America is already a regulated bank in the US, he expects Indian regulators to conduct the required checks but does not foresee significant regulatory problems.
Watch the full conversation here
“For the regulator, if you are a regulated bank in an overseas jurisdiction and there is a clear report from that regulator, in this case the Fed, if there is a clear line to say that there is no issues with Bank of America, which I doubt there will be, regulatory issues in India are a matter of process,” he said.
Catch all the latest updates from the stock market here
