Tag: bajaj finance

Bajaj Finance acquires more customers after HDFC Bank’s halt on credit card, BFSI News, ET BFSI

Banking & Finance

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Bajaj Finance, the behemoth in consumer lending, posted a slight drop in new consumer loans at 5.5 million in January March quarter against 6 million a year ago. However, the company acquired 2.3 million new customers in Q4 FY21 as compared to 1.9 million in the fourth quarter of fiscal 2020.

As it kept the customer accretion rate healthy Bajaj Finance seems to have benefited from the setback to HDFC Bank, which was penalised by the Reserve Bank of India over digital lapses and has been unable to issue new credit cards.

According to analysts, the asset under management growth of Bajaj Finance exceeded expectations at 4% year on year and 6% sequentially as it acquired more customers.

Bajaj Finance’s Q4 performance

Bajaj Finance’s deposits rose 21% on year to Rs 25,800 crore as on March 31. The consolidated deposit book was at Rs 23,777 crore as on December 31. Assets increased by Rs 9,500 crore in the March quarter, taking the financier’s total assets under management to Rs 1.53 lakh crore as on March 31. The company’s customer franchise rose 14.1% on year to 48.6 million as on March 31.

The company is well capitalised and its liquidity position remains strong, as its consolidated liquidity surplus was Rs 16000 crore as on March 31. Bajaj Finance had a consolidated liquidity surplus of Rs 14347 crore as on December 31, representing 11.6% of its total borrowing. The capital adequacy ratio was 28.4% as of March 31, which is an improvement over 28.18% as on December 31, according to the provisional figures for the January March quarter.

Analysts expect the company to show healthy traction in consumer B2B (business to business) loans and commercial loans. They also see a gradual uptick in mortgage loans and consumer B2C (business to consumer).

Covid impact on Bajaj Finance.

However, with the surge in Covid cases, asset quality remains a worry as they may increase provisioning and credit costs for Bajaj Finance in upcoming quarters. In the third quarter, the company provided Rs 1,352 crore for loan losses and provisions, which was significantly higher than Rs 831 crore it provided in the same quarter last year. During the third quarter, the company has done a one-time write-off of principal outstanding amount of Rs 1,970 crore and interest outstanding of Rs 365 crore on account of Covid-19 related stress.

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Bajaj Fin to make payments foray with merchants, consumer push

Banking & Finance

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Bajaj Fin to make payments foray with merchants, consumer push

Bajaj Finance on Wednesday announced its foray into India’s competitive payments business. The consumer financier’s push in this segment will cover its 1.03-lakh strong merchant base and five proprietary apps for consumers.

The company is in the process of launching Bajaj Pay for consumers in Q4, which will offer an integrated payment solution comprising Unified Payments Interface (UPI), prepaid payment instrument (PPI), equated monthly instalment (EMI) card and credit card to its customers.

It is also working on Bajaj Pay for merchants, aimed at broadening a payment solution offering for its merchants and enabling growth in its market share from these merchants in the medium term. These moves will all be a part of Bajaj Finance’s business transformation plan.

The financier is building five proprietary marketplaces — EMI store, insurance marketplace, investment marketplace, ‘BF Health’ and a broking app — with the help of group companies.

“These 5 apps will provide customers with an option to review, compare and buy host of financial products and services across electronics, insurance, investments and health,” the company said in its investor presentation.
The company also plans to partner with an adjunct app ecosystem of more than 25 members, which have relevant products and services for its customers. “These apps will provide adjacency to BFL’s core offerings thereby increasing stickiness,” Bajaj Finance said.

On the operations side, the company is also developing or significantly transforming four ‘productivity apps’ — Sales One app, a merchant app, a collections app and a partner app.

It expects that these apps will significantly improve the productivity and efficiencies of its employees, channel partners and merchant ecosystem by May this year.

“Once deployed, this will require much lower headcount addition as a proportion of growth,” the company said.
Bajaj Finance plans to roll out the first phase of its business transformation by mid-July, 2021.

The business transformation once fully delivered will drive significant velocity gains, reduction in operating costs and significant improvement in customer experience, it expects.

It said it has accelerated its business transformation journey to provide financial products and services to its 46 million customers in a seamless manner by creating an omnichannel framework. The omnichannel model will enable the customer to move between online to offline and vice versa in a frictionless manner.

Bajaj Finance’s push to enable a stronger and direct digital connect with its customers is significant in the light of the Reserve Bank of India’s (RBI) imposition of a monetary penalty of Rs 2.5 crore on the company for using coercive methods of recovery from its borrowers.

The regulator held the company accountable for its failure to ensure that its recovery agents did not resort to harassment or intimidation of customers as part of its debt collection efforts.

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RBI fines Bajaj Finance for use of coercive means of recovery

Personal Finance

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RBI concluded that the charge of non-compliance with the directions was substantiated and warranted imposition of monetary penalty.

The Reserve Bank of India (RBI) on Tuesday imposed a monetary penalty of Rs 2.50 crore on Bajaj Finance for using coercive methods of recovery from its borrowers, and violation of general guidelines and one specific direction issued by the regulator. The central bank held the consumer financier guilty of violating directions on managing risks and code of conduct in outsourcing of financial services by non-banking financial companies (NBFCs) and the fair practices code (FPC) for applicable NBFCs. In addition, Bajaj Finance was also found to have violated a specific direction to ensure full compliance with FPC in letter and spirit.

“This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934, taking into account the failure of the company to ensure that its recovery agents did not resort to harassment or intimidation of customers as part of its debt collection efforts and thereby failing to adhere to the aforesaid directions issued by RBI,” the regulator said in a statement on its website. There were also persistent and repeated complaints about recovery and collection methods adopted by Bajaj Finance, the RBI said.

For the above lapses, a notice was issued to the company advising it to show cause as to why a penalty should not be imposed for such non-compliance. After considering the company’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, the RBI concluded that the charge of non-compliance with the directions was substantiated and warranted imposition of monetary penalty. “This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers,” the regulator said.

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