Bajaj Finance, a major player among non-banking financial companies is planning to profitably mix consumer, SME, commercial, rural lending and fee-based product distribution, and offer a mix of secured and unsecured assets.Rajeev Jain, Managing Director, Bajaj Finance, said in an e-mail interview withThe Hinduabout the company’s prospects. Edited excerpts.
How is 2015-16 panning out so far for the financial services industry as well as Bajaj Finance, given that we are in the last month of the first half?
The finance industry in India is presently witnessing a revolution by adopting disruptive technology. New licences, smartphones, Aadhar identification, e-sign, payments banks, IMPS and other technology-related revolutions - some regulated, some design based, some market related. In a large market like India, there are always opportunities to grow if a win-win value proposition is created. We at Bajaj Finance continue to work on the same and are quite happy with our progress so far. Our diversified business model is quite helpful in maintaining growth as we cater to customers across consumer/SME and commercial clients. Our technology platforms provide us an edge over competition as we have not only been able to successfully implement technology, but also ensure that all concerns of clients are taken into consideration to ease the process for them.
Banks have also progressed on retail lending business and given their aggression in the segment, do they now pose a big challenge for NBFCs? If yes, what is your strategy?
India is a very big market with ample opportunity for all and there cannot be dearth of opportunity. We have set a 25-30 per cent growth trajectory for us as a company and we do not see any challenges at this point in over achieving this objective. Our strategy is to strike a balance between existing customers and new customers. A significant part of our business growth continues to come from existing customers, where we leverage our analytics and technology to offer sharp propositions. We believe we can do a lot of things to increase wallet share of our own customers which will be the major contributor for our growth expectations.
Our focus is to profitably mix consumer, SME, commercial, rural lending and fee based product distribution, as well as offer a mix of secured and unsecured assets. Our deep geographic distribution also helps us leverage large and growing customer franchise, as also attract, train and retain talent – we are regularly expanding so as to cater to more and more customers.
Do you see any pick-up in the consumer loans this festive season, given the overall sluggishness in sentiment and slowdown in GDP growth?
Each festive season is a lift from a normal month. We do not see any deviation this year too, though unseasonal monsoon led to some challenges from April to July. Monsoon deficit in some parts of country and uncertain global environment is indicative of changes in consumer mood for shopping. Having said this, Independence Day weekend (August 15), which in a way is the signal for coming festive season, saw good retail sales. Further, September events will shape how consumer mood pans out.
Banks are engaging their customers on the mobile/digital platform in a very big way. How is Bajaj Finance engaging its large customer base on the digital side?
Innovation and convenience are key to survival in this digital era. We have a very large volume of business and hence, it is wise as well as essential for us to leverage digital platforms. We have been leveraging the digital platform from quite some time now. For instance, we adopted cloud computing since 2009, we service our customers with loan details as well as any query they have on self-service basis from our website from long, we have 2.5 MM customer traffic on our website each month, we started 100 per cent digital loan approval process 3 years ago and are quite encouraged with our progress.
We offer four products to be serviced end-to-end digitally and this channel contributes as high as 15-20 per cent of our monthly volumes for some of these businesses.
We are also seeing systematic movement of consumers from Internet to mobile. For example, on our online platform as many as two-third customers come to us from mobile.
Hence, this festive season, we plan to leverage the mobile channel quite effectively. We are working on creating capabilities which will ease the process of loan taking for our customers from their mobile phones. We are quite excited with this project.
Bajaj Finance has exited infrastructure financing. Why have you taken such a step, when national priority as espoused by Prime Minister Narendra Modi is to develop physical infrastructure?
We have always ventured into a business after careful evaluation with right propositions, aiming for sustained growth.
We believe in presence in selected segments where we have been or can be a relevant player. Given the dynamics of the infrastructure business in terms of competitive positioning or from credit performance, we do not feel we can get to market relevance in that business and hence, we have decided to exit financing infrastructure segment.
How is your SME lending and commercial lending business segment performing in this fiscal, so far? What is your outlook for this year?
Our biggest differentiator in the SME business is our fast approval turn-around time and flow based underwriting on cloud platform.
The use of new technology as also least number of documents requirement make us a frontrunner in the business. Bajaj Finance is focused on high net worth SMEs with an average annual sales of Rs.25 crore with established financials and demonstrated borrowing track records. In the first quarter this year, our SME business witnessed steady growth and on an average maintained over 60 per cent Y-o-Y growth.
Bajaj Finance is quite upbeat about rural lending business. Given your focus on consumer durable loans, lifestyle product loans, do you think you would see continued success in the rural lending segment, given that monsoon has played havoc in rural Karnataka and significant parts of Maharashtra?
We believe that for most product categories rural India offers great opportunities. As we rolled out our business in rural India 3 years ago, we have gained some experience in the business. We are quite upbeat with the progress and feel that rural India offers great opportunity for all our products.
Yes, deficit monsoon is a material event, however its impact will be different in different parts of the country. Given our relatively small size in the overall rural lending space, we do not foresee significant challenges to our rural growth strategy.
We need to keep in mind that both rural consumers and business owners have the same aspirations as urban and hence, they need financial service products as much as urban. We will continue to grow in this business.
Bajaj Finance raised some Rs.1,400 crore earlier in 2015, how do you intend to deploy funds and to which segment? What are your expansion plans?
We have asset growth rates of over 25 per cent and that needs capital to be deployed.
We also have a strong pipeline of products as well as product extension besides planned geographic expansion.
Hence, we intend to continue the growth momentum and raise capital.
Bajaj Finance missed getting universal banking licence, and you did not apply for either small finance bank or payments banks licence. So, what’s next for Bajaj Finance?
Given our business construct, we feel that universal bank licence is the right model for us rather than the payments banks model.
When given a chance, we would therefore, want to apply for a universal bank licence as and when RBI invites application again or creates a tap licence framework.
oommen.a@thehindu.co.in
