Being in different businesses helped us grow: Rajeev Jain

Interview with CEO, Bajaj Finance

Bajaj Finance, which is keen on securing a banking licence, is aggressively venturing into new areas to push business growth. Chief Executive Officer Rajeev Jain, in an interview with Krishna Pophale, shares the company's strategy, as well as his views on the norms for new banking licences. Edited excerpts:

Amid a slowing economy, banks are seeing sluggish loan demand. How has the economic slowdown impacted Bajaj Finance's growth momentum?
This year, the banking system would account for Rs 55 lakh crore; we are at Rs 18,000 crore---we account for 30 basis points of the banking industry. Let's assume the banking system would grow only 10 per cent next year; we'll grow, let's say, from Rs 18,000 crore to Rs 24,000 crore. The point I would like to make is our relative size of business allows us to keep growing. On a fundamental basis, it doesn't matter whether economic growth is more or less than five per cent. We are so small that we can grow for the next 10 years. The doubling of growth in the balance sheet every year may look very large; but in the context of the entire industry's balance sheet, we are very small. Therefore, we can keep growing. We can expand products, geographies and segments.

But interest rates are still very high. Isn't that affecting the demand for loans?

Things have definitely slowed ---two-wheelers have slowed. This year, the two-wheeler industry would be lucky to grow three to four per cent and the forecast for next year is it would grow zero to one per cent. We will strive to improve our market share within the existing market. The consumer durables market has slowed considerably, but the digital category is growing. We would seize the opportunities in pockets that are growing. Yes, consumption has slowed, but there are enough opportunities within it to grow.

In the last four years, Bajaj Finance has doubled its balance sheet every year. Do you think such growth is sustainable?

Six years ago, we had two lines of business (consumer durables and two-wheelers). Now, we are present across 10 lines of business. Today, we have four lines of business in the consumer space and we are the country's largest two-wheeler and consumer durables lender. Expansion across lines of businesses has helped us increase the size of the balance sheet without taking disproportionate risks. If we were a mono-line player and that particular industry slowed, we would have stopped growing. Being in different businesses helped us grow. We expect to end the year with a Rs 18,000-crore balance sheet.

What new lines of businesses are you planning to enter?

Now, we would enter rural areas and start with gold loans. Gold is the most widely-held asset in rural regions. So, you need this product if you are entering rural areas. Till now, we had loans against property for small and medium enterprise. Now, we have started home loans for salaried people.

What do you think of the regulations proposed for non-banking financial companies (NBFCs) raising tier-I capital, as well as asset classification norms?
We completely support the new norms for NBFCs; they are in line with global regulations. I don't see any problem with these norms.

Bajaj Finance is keen on a banking licence. What ground work you have started for this?

Yes, we are interested and are studying the final guidelines issued by the Reserve Bank of India (RBI). We should be able to take a call soon. Bajaj Finance would be converted into a bank according to RBI guidelines. We have raised certain queries with the regulator, with regard to the cash reserve ratio and the statutory liquidity ratio norms. If existing NBFCs are granted licences, they would take a hit if these norms have to be followed from the first day. We will wait for a clarification. At this moment, it is a little premature to talk about the preparations.