Shares of Jio Financial Services were gaining on Friday after the financial arm of Reliance Industries said it had received the Reserve Bank of India's (RBI) approval to become a core investment company (CIC).

What Happened: The company has obtained the RBI's approval to turn itself from a non-banking financial company (NBFC) to a CIC, it said in an exchange filing on Thursday.

The RBI describes a CIC as an NBFC with an asset size of ₹100 crore or above. The primary responsibility of a CIC is to acquire shares and securities under specific conditions. CICs are mandated to maintain at least 90% of their net assets invested in equity shares, preference shares, convertible bonds or loans within its group companies.

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The firm will be further restricted from active trading in investments, with only block sales for dilution or disinvestment purposes being allowed. Financial activities will be restricted to providing loans to group companies, issuing guarantees and investing in specified financial instruments.

At the same time, the conversion to a CIC will enable Jio to delineate its various business units and unlock value discovery for its investors while also being in better compliance with regulation and allocating capital more efficiently.

The development follows Jio Financial Services' application last year to the RBI requesting approval for the conversion. In November 2023, the company made the request to the central bank shortly after it was spun off from Reliance Industries in August of that year.

Price Action: Jio Financial Services was trading 1.58% up at ₹353.55 as markets opened on Friday.

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