Published By : 29 Sep 2015 | Published By : QYRESEARCH
Though Bajaj Finance could not get a banking licence last year, the entire procedure of applying for the licence had a positive impact on the company. According to Vice Chairman Sanjeev Bajaj, going through the process of applying for the licence helped the company to boost its balance sheet, expand its presence in rural and SME sectors, and bolster back-end operations. This led the company to find out opportunities to cross-sell its products. Bajaj stated that the whole process unearthed some exciting opportunities that were not earlier explored by the company. The rural business plan has been outlined along with cross-selling of the financial products. According to Bajaj, this has made Bajaj Finance as ‘non-banking bank’.
Managing Director Rajeev Jain has added that the quest to get a banking licence made the company follow strict financial norms and government standards. For example, liquid investments in the bracket of 5-7% of the average loan book is maintained, a practice that is usually followed in banks. Jain has further stated that Bajaj Finance has not yet given up its hope to become a bank and would be interested whenever the Reserve Bank of India invites applications for new licences.
The top management is focussing on Bajaj’s aggressive growth in the next five years, especially in the rural and SME sectors. The company has competitors including new small finance banks as well as NBFCs such as Reliance Capital, L&T Finance, and Edelweiss Capital. However, Jain mentioned that the company is not threatened by competition as it has witnessed 35% growth last year. In the past seven to eight years, Baja Finance has diversified into various products such as auto finance, loan against property, personal loans, home loans, business loans, SME lending, and others. Further, it has been using technology to penetrate into the new sectors.