Bajaj Finance

Bajaj Finance Limited (BFL) is an Indian non-banking financial company headquartered in Pune. It is one of the leading non-banking financial companies (NBFCs) of India with a customer base of 83.64 million and holds assets under management worth inr 3306150000000, as of March 2024.

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.

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. 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. 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. In the subsequent years, Bajaj Auto Finance diversified into business and property loans as well.

In the year 2006, the company's assets under management hit the inr 10000000000 crore mark and are currently at inr 523320000000. 2010 saw the company's registered name change from Bajaj Auto Finance Limited to Bajaj Finance Limited.

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. Additionally, by 2020, it started using data analytics and various big data tools to maintain its competitive position.

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.

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. 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.

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. And, across 3800 towns, it has 294 consumer branches and 497 rural locations with over 33,000+ distribution points and 1,50,000+ stores.

Subsidiaries

 * Bajaj Housing Finance, as a wholly owned subsidiary of Bajaj Finance, provides various housing finance products, including home loans, loans against property, and lease rental discounting, among others. In June 2024, it has filed its DRHP with Securities and Exchange Board of India for a inr 70000000000 initial public offering, including a inr 40000000000 crore fresh share sale and a offer-for-sale by parent company, Bajaj Finance.
 * Bajaj Financial Securities, the brokerage division, handles stock market equities trading.

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. Additionally, a similar study from Indian Institute of Management Bangalore noted the company's efforts in expanding its geographical reach, focusing on product innovation, and putting emphasis on cross-selling as key contributors to its NPA performance.

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.

For FY23, the company reported a 62% increase in profit after tax to inr 102900000000, driven by a 30% increase in net interest income to inr 264010000000.

Funding and investments
The parent company, Bajaj Finserv Limited, holds 52.49% of the total shares and has a controlling stake in the subsidiary. 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.

According to an exchange filing in June 2023, the company's assets under management reached approximately inr 2700500000000, reflecting a 32% increase from inr 2040180000000 recorded earlier on June 30, 2022

Investments
In 2017-18, Bajaj Finance acquired a 12.6 percent interest in the mobile wallet company MobiKwik. Bajaj Finance and Sequoia Capital India had planned to sell MobiKwik shares worth around inr 690000000 and inr 950000000, respectively, through an Initial Public Offering in 2021, which has been postponed due to the poor economic conditions.

In November 2022, Bajaj Finance announced its intention to acquire Mumbai-based SnapWork Technologies for inr 930000000 through a combination of primary and secondary transactions. The acquisition was anticipated to be completed before 31 December 2022.

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.

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'. 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. In its most recent exchange filing in May 2024, the company announced that the RBI lifted mentioned restrictions with immediate effect, citing the remedial actions taken by the former as the basis for latter's decision.

Philanthropy
Bajaj Finance is involved in "Bajaj Beyond," a collaborative CSR initiative with Bajaj Auto and Bajaj Electricals, committing inr 50000000000 crore to multiple social impact projects. The company collaborates with various institutions including the Jamnalal Bajaj Foundation, Jankidevi Bajaj Gram Vikas Sanstha, and the Kamalnayan Bajaj Hospital. Also, it is involved in various areas such as education, empowering women, providing skill-building training, healthcare, and other projects focused on socio-economic development.