Bajaj Finance, country’s largest consumer durable finance provider, plans to enter micro finance segment by 2025, extending its focus beyond the middle class, Sanjiv Bajaj, Chairman & Managing Director Bajaj Finserv has said.

Currently, Bajaj Finserv, which is the holding group company for all the financial services businesses of the Bajaj Group, holds 52.49 per cent equity stake in Bajaj Finance, which primarily focuses on the middle class.

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“We do plan in the next couple of years to get into microfinance segment. We are now doing all branded two wheelers now. In the next 12 months we will enter the four wheeler (financing) space. In FY’25, we will enter rural tractor space and at some point then microfinance as well”, Bajaj said at the All India Management Association’s 8th National Leadership Conclave in the capital on Tuesday.

He was responding to a query from Sunil Kant Munjal, Chairman, Hero Enterprise, who was moderating the session. Munjal wanted to know whether Bajaj Finance was looking at a new audience (beyond the middle class) or whether it saw for itself enough room to continue to grow in middle India.

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Competitive landscape

Asked as to how sees the competitive landscape post Reliance Group’s imminent entry in financial services, Bajaj said few large companies or groups that have significant access to customers (Reliance is one of them) have advantage of ready customer base, but building the right set of capabilities to manufacture financial products and sell them takes time. 

“There isn’t a technology system out there or a risk model that you can buy and implement. So lot of it is actually learning and it will take lot of time. We at Bajaj Finance are now at AUM of ₹ 2.5 lakh crore and still less than 2 percent of banking sector. Opportunity is tremendous. Yes the top 100 cities will see intense competition as some of the new players get started. But the opportunity is beyond that and here to stay”, Bajaj added.

He highlighted that Bajaj Finance has created capabilities where it can now give a decision on a loan application in 30 seconds after analysing nearly 400 variables of a prospective loan customer.

Formal financial system

Bajaj Finance, which has presence in 1,50,000 stores across the country, has enabled as many as 15-17 million Indians enter the formal financial system in the last four years.

Bajaj also stressed the need for financial services sector to grow 2-2.5 times to support the expected growth in real economy. 

Bajaj noted that most of India’s growth is funded currently by foreign capital. “We do need foreign capital. We also have to make sure that we build long term sources of domestic capital. We can’t for long term be relying on foreign capital for long. Today we are an attractive destination, tomorrow we may not be”, Bajaj added.