Bajaj Finance's B2B segment to add 1,000 cities in the next three years

In Q1 FY24, B2B disbursements were up 37 per cent at Rs 22,625 crore as against Rs 16,502 crore in Q1 FY23. Its AUM stood at Rs 2,70,097 crore at the end of June 2023

As a step to entrench its consumer finance business, Bajaj Finance (BFL) plans to scale up its business-to-business (B2B) activity, both in terms of volume as well as value.

It plans to add up to 1,000 cities in the next three years and this will mark its presence in around 5,000 cities.

The expansion activity will be more in Northern and Eastern India. The company is growing its network in Uttar Pradesh (UP) as well as Eastern and Northeast India.

Four years ago, the company was in only 15 cities in UP, and today, it is in 450 cities and towns. Eventually, it plans to be in 700 cities and towns in the state, Anup Saha, executive director, BFL, told Business Standard.

Its total lending branches have grown to 3,828 in June 2023 from 3,586 in June 2022. It was 3,113 in June 2021 and 2,408 in June 2020.

While B2B accounts for 90 per cent of its customers, it constitutes only 10 per cent of its assets under management (AUM), given that the tenor for such loans is shorter.

The B2B unit is driven by relationships with dealers and presence at counters of their stores. The segment comprises retail lending for consumer electronics, durables and lifestyle products.

In Q1 FY24, its B2B disbursements were up 37 per cent at Rs 22,625 crore against Rs 16,502 crore in Q1 FY23. AUM stood at Rs 2.7 trillion at the end of June 2023.

Saha said the company’s business accounts for 1.64 per cent of India’s total credit and 2.52 per cent of total retail credit.

In the next three-four years, it expects business to grow to 2.72 per cent of India’s total credit and 4 per cent of retail credit.

The B2B mix in AUM will remain range bound. However, the growth rate is higher.

Growth rates (for both urban and rural) depend on the underlying economic drivers as well as the credit parameters that play out as these are distinct markets.

The rural business started much later, and thus, it continues to provide greater opportunities for distribution and customer expansion. Therefore, this segment is expected to grow at a faster pace due to its smaller base.

Urban B2B will continue to grow as well, as seen by the Q1 FY24 numbers, which show that BFL has gained three-four per cent market share in this business segment, Saha said.