The U.S. lender will be a joint venture partner in Jio Financial's non-bank lending arm through a preferential allotment of equity shares and warrants.
The transaction initially gives Bank of America a 26.5% stake, which can go up to 49.9% upon exercise of the warrants.
The deal is the latest large investment in India's financial services sector, which include Japan's MUFG investment in Shriram Finance and Dubai-based bank Emirates NBD's 60% stake in lender RBL Bank.
"The investment will allow BofA to expand its participation in the rapidly growing Indian market .... while doing so with a partner that has local expertise," the companies said in a statement.
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