Airtel’s ₹20,000-cr NBFC shot sets up clash with Jio Financial

Bharti Airtel and promoter group to inject ₹20,000 crore transferred to Airtel Money’s newly licensed non-banking arm; It’s a move that puts the telecom operator in direct competition with Mukesh Ambani’s Jio Financial Services.

Airtel Money, a company founded in July, received its non-banking financial company (NBFC) license earlier this month, Bharti Airtel informed the stock exchanges on February 17. Non-bank lenders will not be able to accept deposits as per the licensing conditions of the Reserve Bank of India (RBI).

In a statement issued on Monday, Bharti Airtel said it will contribute 70% of the capital, while the promoter group will provide the remaining 30% through Bharti Enterprises Ltd.

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Considering that the minimum capital adequacy requirement is 15%, the NBFC can raise around five times its capital. This will allow Airtel Money to create a credit book. ₹Analysts said there is a figure of 1 trillion with the current capital injection.

A comparison with Reliance Industries’ financial services business is inevitable. For example, Jio Financial Services has a wide range of businesses, including payments bank Jio Payments Bank and non-bank financier Jio Credit. Airtel now has Airtel Payments Bank and Airtel Money.

A senior advisor said Airtel is following the same model as Reliance and getting the NBFC license marks its attempt to enter the lending market from which it was left out until now. Payment banks were conceptualized as a separate category in 2015 to reach out to the unbanked and unbanked audiences and accepted deposits by 2015. ₹2 lakh per customer. But they cannot lend money.

Amid tighter licensing

While the RBI has maintained its stance against corporate entry into banking, many groups have turned to NBFC licenses over the years instead. Large business entities such as Larsen & Toubro and Godrej Group also operate non-banking financial arms.

“Airtel’s motivation for moving to an NBFC setup could be a massive increase in revenue from credit products like working capital loans, credit cards, personal loans, etc. A payments bank has restrictions on such offerings,” said Abhay Johorey, managing director, consultancy Protiviti Member Firm of India.

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According to Johorey, to succeed in the NBFC space, Airtel will need strong underwriting capabilities along with targeted lending and robust collection processes.

he said ₹The capital pool of Rs 20,000 crore creates a solid foundation for a well-known brand like Bharti Airtel, allowing it to start with small-ticket personal loans, evolve its business model and gradually build a diversified portfolio as it reaches key milestones.

committed to inclusion

Meanwhile, Airtel said its expansion in India’s fast-growing financial services sector underlines its commitment to deepening financial inclusion and empowering underserved consumers.

Over the last two years, Bharti Airtel has built a strong credit engine and operates under a lending service provider (LSP) model, making it easier to extend loans to partners without lending from its own books.

Lending service provider platform has already achieved adoption ₹Airtel said a payment of ₹9,000 crore has been made.

“We have built one of India’s most trusted and scalable digital lending engines, reaching millions with high-quality credit backed by the best performance metrics in the industry,” Gopal Vittal, vice president of the company, said in the statement. “Our NBFC expansion strengthens this foundation and reflects our ambition to build a differentiated, future-ready digital lending business.”

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As of the end of December, Airtel had 466 million customers in India, of which 368.5 million were mobile users. In comparison, Jio had 515.3 million users in the country. Average monthly revenue per user (Arpu) for Airtel was: ₹259 compared to Jio’s ₹213.7.

Jio Financial Services’ assets under management (AUM) under NBFC in the quarter ended December ₹19,049 crore, an increase of 4.5 times annually.

“According to CareEdge Ratings, official credit to GDP ratio in India stands at 53%, highlighting the scope of lending in the country,” Airtel said. “The expansion is also a natural fit that will leverage the large Airtel customer base to create the next growth engine for the company and further diversify its portfolio.”