Should RBI treat Reliance as a ‘Big Tech’?

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Editor's note: Last month, Reliance Industries announced that it will demerge its fledgling financial services business, rename it as Jio Financial Services and list it on the bourses.  The Mukesh Ambani-led conglomerate’s expansion into the financial services sector under the Jio brand makes perfect sense. The oil-to-telecom behemoth can leverage its vast scale, high credit ratings and brand value to distribute high-profit margin financial products and raise funds easily. Moreover, India’s underserved financial services market offers a unique opportunity for Reliance to disrupt this space. The company said the regulatory approval to begin operations as a non-banking financial company is in place. It was also announced that Jio Financial Services will raise funds to provide adequate regulatory capital for lending to consumers and merchants, as well as incubate other verticals such as insurance, payments, digital broking and asset management. In this context, I’d like to draw your attention to a research paper published by the Reserve Bank of India on 17 October—four days before Reliance’s announcement. Titled “‘Bigtechs’ in the Financial Domain: Balancing Competition and Stability”, it has been authored by four …