Bajaj Finance

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Bajaj Finance Limited
FormerlyBajaj Auto Finance Limited (1987–2010)
Company typePublic
BSE: 500034
NSE: BAJFINANCE
BSE SENSEX Constituent
NSE NIFTY 50 Constituent
ISININE296A01024
IndustryFinancial services
Founded25 March 1987; 37 years ago (1987-03-25) as BAFL
FounderRahul Bajaj
Headquarters
Pune
,
India
Key people
[1]
ProductsLending, fixed deposits, mutual funds
RevenueIncrease₹13,382.00 crore (US$1.7 billion) (FY2023)
Increase₹4,256.05 crore (US$530 million) (FY2023)
Increase₹3,551 crore (US$440 million) (FY2023)
AUMIncrease ₹270,050 crore (US$34 billion)[2]
Total assetsIncrease ₹290,264 crore (US$36 billion)
ParentBajaj Finserv (52.49%)
SubsidiariesBajaj Financial Services
Bajaj Housing Finance
Bajaj Financial Securities
Rating
  • CRISIL AAA+/Stable Long-term debt[3]
  • ICRA AAA+/Stable Non-convertible debenture[4]
  • CARE AAA+/Stable Non-convertible debenture[5]
Websitewww.bajajhousingfinance.in

Bajaj Finance Limited (BFL) is an Indian non-banking financial company headquartered in Pune.[6][7] It is one of the leading non-banking financial companies (NBFCs) of India with a customer base of 73 million and holds assets under management worth ₹270,050 crore (US$34 billion).[8]

As per the 2023 list of NBFCs issued by the Reserve Bank of India, Bajaj Finance Limited holds the second position in the upper layer based on scale-based regulation guidelines.[9][10]

History

Originally incorporated as Bajaj Auto Finance Limited on March 25, 1987, as a non-banking financial company, primarily focused on providing two and three-wheeler finance.[11] After 11 years in the auto finance market, Bajaj Auto Finance Ltd launched its initial public issue of equity share and was listed on the Bombay Stock Exchange and National Stock Exchange of India.[12] At the turn of the 20th century, the company ventured into the consumer durables finance sector and started offering small-size loans at zero interest rates.[13][14] In the subsequent years, Bajaj Auto Finance diversified into business and property loans as well.[15][16]

In the year 2006, the company's assets under management hit the ₹1,000 crore (US$130 million) crore mark and are currently at ₹52,332 crore (US$6.6 billion). 2010 saw the company's registered name change from Bajaj Auto Finance Limited to Bajaj Finance Limited.[citation needed]

By 2015, BFL was known to be the first in the industry to set up a series of Disaster Recovery (DR) data centers that ensure business continuity for customer acquisition, loan processing, and servicing.[17] Additionally, by 2020, it started using data analytics and various big data tools to maintain its competitive position.[18]

As of June 2022, Bajaj Finance has been working with RBL Bank and DBS Bank to issue co-branded credit cards. But, after the Reserve Bank of India opened the door for non-banking financial companies to enter the credit card industry, the company plans to introduce its credit card products by the beginning of the first quarter of 2023.[19]

In January 2023, the company released its long-term strategy (LRS) to guide growth through different online and offline products. Under that strategy, Bajaj Finance launched its loan against property (LAP) business for micro, small, and medium-sized enterprise (MSME) customers, and has plans to launch new auto loans in the second quarter of 2024, microfinance in the fourth quarter of the same year, and tractor financing in the first quarter of 2025.[20][21] By 2020, 60% of Bajaj Finance's workload was on cloud and originally, they aimed to create a super-app for existing customers, but due to COVID-19 pandemic in India, they expanded the plan to encompass various services by integrating five proprietary marketplaces within their ecosystem—EMI store, insurance, mutual funds, broking, and health.[22]

As of March 2023, the company deals in consumer lending, SME (small and medium-sized enterprises) lending, commercial lending, rural lending, deposits, and wealth management.[23] And, across 3800 towns,[24] it has 294 consumer branches and 497 rural locations with over 33,000+ distribution points and 1,50,000+ stores.[25]

Financials

In the year 2021, an analysis using Spearman's rank correlation coefficient was conducted to examine the relationship between revenue factors and non-performing assets (NPA) parameters in Indian non-banking financial companies. Specifically, when studying Bajaj Finance, it was observed that there existed a statistically significant positive correlation between revenue and gross NPA (P<0.04), profit after tax (PAT) and gross NPA (P<0.04), as well as return on assets (ROA) and gross NPA (P<0.005), with a negative correlation found in the latter case.[26] Additionally, a similar study from Indian Institute of Management Bangalore noted the company's efforts in expanding its geographical reach, focus on product innovation, and emphasis on cross-selling as key contributors to its NPA performance.[27]

In a study conducted in 2023, examining 30 companies listed on the Bombay Stock Exchange, which was subsequently published in the European Economic Letters journal, it was found that Bajaj Finance stock reached a maximum average return of 58.58%. This indicates a significant level of variability among the stocks over the past decade. The maximum average return surpasses the mean return of 13.70% by over four times, highlighting the substantial influence of Bajaj Finance's average return on the overall mean return.[28]

For FY23, the company reported a 62% increase in profit after tax to ₹10,290 crore (US$1.3 billion), driven by a 30% increase in net interest income to ₹26,401 crore (US$3.3 billion).[29]

Funding and investments

The parent company, Bajaj Finserv Limited, holds 52.49% of the total shares and has a controlling stake in the subsidiary.[21] Other major investors include Maharashtra Scooters Limited, the Monetary Authority of Singapore-Government of Singapore, Nomura Securities, BNP Paribas, Smallcap World Fund INC, and AXIS Long Term Equity Fund.[30][31]

According to an exchange filing in June 2023, the company's assets under management reached approximately ₹270,050 crore (US$34 billion),[32] reflecting a 32% increase from ₹204,018 crore (US$26 billion) recorded earlier on June 30, 2022[25]

Investments

In 2017-18, Bajaj Finance acquired a 12.6 percent interest in the mobile wallet company MobiKwik.[33][34][35] Bajaj Finance and Sequoia Capital India had planned to sell MobiKwik shares worth around ₹69 crore (US$8.6 million) and ₹95 crore (US$12 million), respectively, through an Initial Public Offering in 2021, which has been postponed due to the poor economic conditions.[36]

In November 2022, Bajaj Finance announced its intention to acquire Mumbai-based SnapWork Technologies for ₹93 crore (US$12 million) through a combination of primary and secondary transactions. The acquisition was anticipated to be completed before 31 December 2022.[37]

Regulatory

In September 2022, the Reserve Bank of India (RBI) has included Bajaj Finance as one of the 16 NBFCs that are part of the NBFC-Upper Layer list. This means that the RBI has requested that the company must develop and implement a board-approved policy for the adoption of the more stringent regulatory framework that is applicable to it.[38][39]

Compliance issues

In November 2023, RBI banned the company from approving or distributing loans through two of its lending services, namely 'eCOM' and 'Insta EMI Card'.[40][41] The effect of ban on Bajaj Finance's financial health is tempered by its diverse portfolio. The company's risk management approach has protected it from over-reliance on any specific product or sector, reducing the potential impact of the RBI's intervention.[42][43]

Philanthropy

The company is involved in various areas such as education, empowering women, providing skill-building training, healthcare, and other projects focused on socio-economic development.[44]

Publications

Analyst reports

Case studies

  • Das, Narayandas; Tahilyani, Rachana (2022). "Bajaj Finance: Building an Omnipresent Financial Services Firm". Harvard Business School Case. 26 (2). Boston: Harvard Business School: 523–040.

Journals

References

  1. ^ Adhikari, Anand (4 March 2022). "How Rajeev Jain is Transforming Bajaj Finance". Business Today (India). Retrieved 30 April 2022.
  2. ^ Pullokaran, Jomy Jos (3 July 2023). "Bajaj Finance new loan bookings up 34% in Q1, assets under management grows 32%". CNBC TV18. Retrieved 3 July 2023.
  3. ^ "Bajaj Finance deposits cross Rs 50,000 crore". The Financial Express. 1 August 2023. Retrieved 30 June 2023.
  4. ^ "Bajaj Finance Ltd.: Ratings reaffirmed". ICRA Limited. 6 June 2023. Retrieved 30 June 2023.
  5. ^ "Bajaj Finance Ltd Revised" (PDF). CAREEdge. 5 January 2023. Retrieved 30 June 2023.
  6. ^ "World Bank's IFC to make debt investment of $150 mn in Bajaj Finance". VCCircle. 21 April 2021. Retrieved 17 March 2022.
  7. ^ Mahali, Monica; Bandopadhyay, Kalpataru (10 March 2022). "Evidence-Based Management: Case of Bajaj Finance Limited". The Management Accountant. 57 (4). Rochester, NY: 47–51. doi:10.33516/maj.v57i4.47-51p. S2CID 251269765. SSRN 4083601.
  8. ^ Keshavdev, V (4 September 2023). "Battle To Watch: Jio Fin Vs. Bajaj Fin". Fortune India. Retrieved 1 October 2023.
  9. ^ Bureau, BL Mumbai (14 September 2023). "RBI places 15 NBFCs in the upper layer under scale-based regulations". BusinessLine. Retrieved 1 October 2023.
  10. ^ Dayal, Yogesh (14 September 2023). "RBI releases list of NBFCs in the Upper Layer (NBFC-UL) under Scale Based Regulation for NBFCs". Reserve Bank of India. Retrieved 1 October 2023.
  11. ^ Sitaraman, Krishnan; Velonie, Ajit; Bhargav, Krishna (13 July 2021). "CRISIL - Rating Rationale, Bajaj Finance Limited" (PDF). CRISIL. Retrieved 17 March 2022.
  12. ^ "Bajaj Finance Ltd (Bajfinance) - Strategy, SWOT and Corporate Finance Report". Marketline. Retrieved 17 March 2022.
  13. ^ Meenakshi, Arun Kumar & N. (2011). Marketing Management, 2nd Edition. Vikas Publishing House. ISBN 978-81-259-4259-7.
  14. ^ Mishkin; S, Frederic; Eakins; Stanley (2000). "Chapter 2: Overview of the Financial System". Financial Markets and Institutions. Boston: Addison-Wesley. p. 31. ISBN 978-93-89588-61-3.
  15. ^ R, Sathishkumar; G, Balamurugan (30 November 2019). "Profitability Analysis of Lease Financing Company (A Study with Reference to Bajaj Finance Limited)". A Journal of Composition Theory. 12 (11). Rochester, NY: 917–924. ISSN 0731-6755. SSRN 3572491.
  16. ^ Piramal, Gita (21 March 2022). Rahul Bajaj: An Extraordinary Life. Penguin Random House India Private Limited. ISBN 978-93-5492-493-4.
  17. ^ Vasudevan, Smita (4 August 2015). "How Bajaj Finance is drawing big returns from its well-placed technology bets". DATAQUEST. Retrieved 29 July 2023.
  18. ^ Phadke, Sanjay (31 March 2020). FinTech Future: The Digital DNA of Finance. SAGE Publishing India. ISBN 978-93-5388-249-5.
  19. ^ Karthik, Hamsini (18 August 2022). "Bajaj Finance readies for entry into credit cards business". www.thehindubusinessline.com. Retrieved 31 August 2022.
  20. ^ Vashisht, Deepak Korgoankar & Nikita (30 January 2023). "Bajaj Finance's long range strategy lifts stock 5% higher". www.business-standard.com. Retrieved 31 January 2023.
  21. ^ a b Srivats, K. R. (12 April 2023). "Bajaj Finance plans entry into microfinance segment by 2025, says Sanjiv Bajaj". www.thehindubusinessline.com. Retrieved 1 May 2023.
  22. ^ Adhikari, Anand (4 March 2022). "How Rajeev Jain is Transforming Bajaj Finance". Business Today. Retrieved 8 March 2024.
  23. ^ "Exploring the Next Generation Employee Experience: Case Study of Bajaj Finance Limited". The Case Centre. Retrieved 17 March 2022.
  24. ^ John, Nevin (10 October 2023). "Bajaj Finance's Fire Fighter". Fortune India. Retrieved 8 March 2024.
  25. ^ a b Shetty, Mayur (7 July 2022). "Bajaj Fin's assets grow 31% to cross Rs 2L crore". The Times of India. Retrieved 1 August 2022.
  26. ^ P, Joseph Antony; Al, Et (4 June 2021). "Study of Comparative Performance of Non-Performing Assets among Selected Leading Non-Banking Financial Companies of India". Turkish Journal of Computer and Mathematics Education (TURCOMAT). 12 (13): 1077–1085. ISSN 1309-4653 – via SCOPUS.
  27. ^ Sonkar, Shubham; Paliwal, Nilesh (2020). "Analysis of the difference in performance among various NBFCs in recent times". Digital Institutional Repository of IIM Bangalore – via Indian Institute of Management Bangalore.
  28. ^ Ali, Shahnawaz (21 July 2023). "Impact of Firm Performance on Stock Returns: A Study of 30 Listed Firms in Bombay Stock Exchange". European Economic Letters. 13 (3): 1253. doi:10.52783/eel.v13i3.422. ISSN 2323-5233.
  29. ^ Kayastha, Anshika (26 April 2023). "Bajaj Finance Q4 PAT up 25% on strong AUM, NII growth". www.thehindubusinessline.com. Retrieved 1 May 2023.
  30. ^ Adhikari, Anand (14 November 2019). "An unusual investor is most bullish on Bajaj Finance stock". Business Today. Retrieved 1 October 2023.
  31. ^ "Bajaj Finance Ltd Share Price Today Live NSE/BSE | ICICI Direct". ICICIdirect. Retrieved 1 October 2023.
  32. ^ Pullokaran, J. J. (3 July 2023). "Bajaj Finance new loan bookings up 34% in Q1, assets under management grows 32%". CNBC TV18. Retrieved 9 July 2023.
  33. ^ "MobiKwik partners Bajaj Finance for larger financial services pie". www.thehindubusinessline.com. 3 August 2017. Retrieved 1 August 2022.
  34. ^ "Bajaj Finance to acquire 12.6% in Mobikwik". The Economic Times. Retrieved 1 August 2022.
  35. ^ Bose, Indranil; Kashyap, Nishant (2019). "Mobikwik's Full Service FinTech Platform Bet: Will it be a Winner?". DSpace @ Indian Institute of Management Calcutta. Retrieved 27 May 2023.
  36. ^ "Mobikwik looks to raise $100 million as it delays IPO plans, founder says the 'markets are not ready'". Business Insider. Retrieved 1 August 2022.
  37. ^ "Bajaj Finance to acquire up to 40% stake in Snapwork Technologies for up to ₹93 crore". www.thehindubusinessline.com. 26 November 2022. Retrieved 31 December 2022.
  38. ^ Dayal, Yogesh (30 September 2022). "RBI releases list of NBFCs in the Upper Layer under Scale Based Regulation for NBFCs" (PDF). Reserve Bank of India. Retrieved 9 October 2022.
  39. ^ "RBI lists 16 NBFCs in upper layer, includes Tata Sons". Financialexpress. October 2022. Retrieved 9 October 2022.
  40. ^ "RBI orders Bajaj Finance to stop eCOM, Insta EMI Card loans". The Indian Express. 16 November 2023. Retrieved 19 November 2023.
  41. ^ Kayastha, Anshika (15 November 2023). "RBI orders Bajaj Finance to stop lending via eCOM, Insta EMI Card". BusinessLine. Retrieved 19 November 2023.
  42. ^ Sampath, Vineetha (4 January 2024). "Bajaj Finance set for a sturdy quarter despite RBI directive". mint. Retrieved 18 January 2024.
  43. ^ "Bajaj Finance stock recoups early losses post RBI ban; analysts see limited impact but eye quick resolution". Moneycontrol. 16 November 2023. Retrieved 18 January 2024.
  44. ^ Mansour, Nadia; Vadell, Lorenzo M. Bujosa (18 February 2022). Finance, Law, and the Crisis of COVID-19: An Interdisciplinary Perspective. Springer Nature. p. 27. ISBN 978-3-030-89416-0.{{cite book}}: CS1 maint: date and year (link)
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