Bajaj Finance shifts strategy, plans to tap retail depositors
With this new plan, Bajaj Finance is looking to double its outstanding deposit base to about Rs 8000 crore a year from Rs 4,100 crore at the end of March.
With this new plan, the company is looking to double its outstanding deposit base to about Rs 8000 crore a year from Rs 4,100 crore at the end of March.
This puts Bajaj Finance almost in the same bracket as Housing Development Finance Corporation among non banking finance companies in terms of minimum deposits. HDFC has Rs 20000 as minimum deposit.
“We are excited to reduce the minimum investment size as an effort to exploit the opportunity as a retail deposit player,” said Sachin Sikka, the company’s head of fixed deposits. “We have seen huge demand from our existing retail customers.”
NBFCs typically offer higher rates than banks to lure depositors. The Pune-based company offers 7.8% on a one-year deposit while the country’s largest lender State Bank of India offers 6.9% on similar maturity.
“Our new offering will allow small depositors to earn higher returns through traditional and “triple A rated” savings product,” Sikka said. Senior citizens would get an additional 0.25% for deposits up to Rs 1 crore.
He said that depositors typically react to new offerings in two to three months and therefore the company may not change interest rates in this quarter despite downward pressure to maintain the gap with bank deposit rates.
Bajaj Finance, part of the Bajaj Finserv group, has also received the Reserve Bank of India’s clearance for marketing its deposit products online, which will find its way in the next two-three months.
It had so far catered to the elite class with average investment of Rs 3 lakh, while according to Sikka, the average ticket size in the industry is in the Rs 30,000-Rs 40,000 range.
Its minimum deposit amount was Rs 75,000 for customers in Delhi and Mumbai, and Rs 50,000 for customers in other cities. The new minimum cap of Rs 25,000 comes into effect from April 3.
Sikka said deposits contribute 9% of the company’s annual borrowings and this ratio is expected to rise to 13% in one year.
The company has a diversified lending business catering to more than 1.9 crore customers across the country with consumer durable being the largest vertical with 70% share. It also provides home loans, loans against property, small business loans, two-wheeler and three- wheeler loans, etc.
Bajaj Finance reported 36% rise in net profit at Rs 556 crore for the third quarter to December 2016.