Bajaj Finserv sets new target of 250 million customers within four years

Indian financial services group Bajaj Finserv has increased its customer target to 250 million in the next four years, chairman and managing director Sanjiv Bajaj told Reuters, betting on strong growth in the South Asian economy.

Bajaj Finserv, one of India's biggest non-bank financial firms, in December set a target of 200 million customers by 2029, but has been winning business more quickly than expected.

"(It's) very promising. We've added 10 million new customers in the last two years," Bajaj told Reuters.

The largest company in the century-old Bajaj Group, Bajaj Finserv has about 92 million active customers in India across divisions including lending, asset management and insurance. The Bajaj Group holds a 55% stake in the financial services company, which is listed on the National Stock Exchange of India.

Bajaj told Reuters in an interview in London that Bajaj Finserv had reached only about 30% to 40% of its potential market and was looking to accelerate growth by targeting India's burgeoning middle class and first-time borrowers.

Bajaj Finserv's largest subsidiary, Bajaj Finance, typically provides loans to small businesses and consumers to fund purchases of household and electrical goods, as well as mortgages via its property finance arm, Bajaj Housing Finance.

The biggest risk to the company's growth plans is that the Indian economy falls short of an 8% growth rate, Bajaj said, which economists believe it needs to meet its goal of becoming a developed nation.

While India's central government has set out plans to lift economic growth, there was a danger this did not translate to a state level, he added.

"The states rightly still have a lot of power, and I hope politics doesn't get the better of economics over there, because then it will deny us that additional opportunity to grow," Bajaj said.

Bajaj Finserv sees customers' ability to repay loans improving from here, he added.

While profit at the firm rose to $1.1 billion in the 12 months to the end of March, up from $900 million the previous year, Bajaj Finserv has set aside cash to cover losses in its loan book since 2020.

The net loss ratio at the company's flagship lending arm Bajaj Finance has reached about 0.7% in the last four or five years, Bajaj said, indicating a "little higher stress".

"Post-COVID, we initially saw a period of stress where we saw revenge buying happening all over the world," he said, referring to the trend of customers spending on expensive goods after the pandemic.

"So actually credit performance improved, and then it (has) started normalising to say 2019 pre-COVID levels. We think by and large it's normalised there; another couple of quarters and it should be fine."

Bajaj Finserv agreed a deal to buy out Allianz from two general and life insurance joint ventures in March for around 2.6 billion euros.

The deal, which is awaiting approval from regulators, will be funded by Bajaj Finserv internally, Bajaj said.

"Neither of the insurance companies has needed capital for the last 8-10 years, so the internal reserves have supported their growth, and that's why we've never felt the need to go to an outside investor for capital," he said.

Bajaj said the company had begun using artificial intelligence chatbots to grant loans and speak with customers and the technology would be central to its growth plans.

Asked if the company could consider international expansion in the future, Bajaj said: "We don't have plans yet, but it could be".

(Reporting by Charlie ConchieEditing by Mark Potter)