Bajaj Finance is looking to spin off its payments vertical as a separate subsidiary, while in the next 3-5 years it is also expecting to meaningfully scale up platforms and apps launched in the past 4-5 years.
“We continue to invest in our payments business and are committed to delivering the entire stack of payments to our customers and merchant ecosystem. Payments business is an integral part of the company,” it added.
See clarification from Bajaj Finance at the end of the report
The non-banking finance company manages around half of all consumer loans in India in volume terms and has significant shares in loan volumes for the purchase of electronic items and iPhones.
Its mortgage book saw a growth of 26 per cent in the March quarter and constituted 28 per cent of its total assets under management, which was at ₹2.47 lakh crore at the end of March. Its payments business is still in the nascent stages and is being scaled up.
In a recent interaction at Jefferies India Forum, Bajaj Finance’s Chief Executive Officer Rajeev Jain indicated that the company is looking at a 4-5 per cent share in retail loans and a 3 per cent share in the payment segment.
New loan verticals
To make this happen the company is foraying into segments such as loans for automobiles, tractors, commercial vehicles, microfinance institutions, and emerging corporates. These are market segments with a potential combined opportunity of ₹13 lakh crore and they constitute roughly 28 per cent of retail credit in India. These are the new loan verticals that the company is expecting to drive growth in the medium to long term.
With a view to pushing its loan products, the company had launched a number of applications and platforms while also strengthening its branch network, all with a long-term horizon that will soon be paying off. The company’s strategy with its digital loan platforms has been to enhance its engagement with its existing customer base, rather than relying only on new customers. The app already has over 3.5 crore users with a significant download velocity. The improvement in operating efficiencies from this is expected to compensate for some compression in the net interest margins in the current year.
With its loan products, the company intends to strike a balance between secured and unsecured credit, those that are profit-maximisers and scale builders and new segments versus those that are part of its existing portfolio.
Bajaj Finance has clarified that it has no plans to spin-off Payments as a separate entity. The company continues to invest in its Payments business as an integral part of Bajaj Finance.