“Bajaj Finance to Enter the Microfinance Market by 2025,” Says Bajaj MD

Written by Danish Akhtar
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Sanjiv Bajaj, Chairman & MD of Bajaj Finserv, has stated the company intends to expand beyond the middle class. They will be entering the microfinancing category by 2025. Bajaj Finserv is the Bajaj Group’s holding company.

 

It owns a 52.49 percent equity investment in Bajaj Finance, which provides financial services mainly to the middle class. He was answering a question from the session’s moderator, Hero Enterprise’s chairman, and CEO, Sunil Kant Munjal. Munjal questioned if Bajaj Finance was expanding its target demographic outside the middle class in India or whether it saw opportunities for expansion within that demographic.

Environment of Competition

He told how the competitive landscape would change with Reliance Group’s impending entry into financial services. Bajaj said that a select few large companies or groups with significant access to customers have the advantage of a ready customer base. Also, developing the appropriate capabilities for manufacturing and selling financial products takes time.

In today’s digital era, industries need to ditch their clunky legacy systems in favor of quicker reaction times while developing new products and working with government agencies. To do this, cloud computing, big data, and AI will be indispensable tools.

Revolutionary Changes by Fintech

Fintech is revolutionizing how people save, borrow, and spend money today. Sanjiv Bajaj, Chairman and Managing Director, Bajaj Finserv Ltd., believes that rapid technological adoption is essential to expanding access to financial services and that fintech provides the most support in bolstering a country’s economy.

Technology’s promotion of financial services among rural youth opens the door to greater financial inclusion. In many cases, strict control stifles creativity. Due to fintech and insurtech-driven disintermediation, the customer-facing aspects of the financial services business are falling apart. To learn how the financial technology industry is helping to improve the country.

There has yet to be a ready-made technological solution or risk model. It’s mostly just learning, and it’ll take a long time. Bajaj Finance’s current AUM of 2.5 lakh crore is less than 2% of the banking sector.

He brought up how Bajaj Finance has developed capabilities that allow it to make a loan decision in 30 seconds after analyzing roughly 400 variables of a potential loan customer.

Structured monetary environment

Bajaj Finance has 1,50,000 points of sale across India. In the previous four years, it has helped 15–17 million people become part of the country’s formal financial system. Bajaj also emphasized the importance of a 2-2.5 fold increase in the financial services industry to back up the anticipated growth in the real economy.

Bajaj pointed out that foreign investment drives most of India’s economic expansion. Foreign investment is necessary. Long-term domestic funding sources are also something Bajaj needs to work on. They must rely on something other than foreign funds in the long run. Bajaj said they may be on a desirable vacation spot now, but that may change tomorrow.

Wrapping Up

Bajaj never catered to the demands of microfinance. Now, when they have finally decided to enter this field, they will cater to the needs of small lenders. This will give a boost in demand and growth of this microfinancing sector.