Two-wheeler, SME sectors most hit by note ban: Rajeev Jain, Bajaj Finance

Bajaj Finance surprised the Street with 33% increase in loan growth. Rajeev Jain, MD, Bajaj Finance, in an interview to Shilpy Sinha, said that SME and two-wheeler were the most affected sectors by demonetisation.

Edited excerpts:

You had updated the exchange about possible impact of demonetisation. Was it what you expected?

Fortunately, it has not played out the way we had expected. Has it fullyplayed out? The answer is no. In the current quarter, the loan losses and provisions are higher by Rs 20 crore due to demonetisation. We saw slippages in the 2-wheeler business in rural areas.

How has the loan growth played out across sectors?

It has played out differently and that is where the whole diversified model has come handy. It was a highly volatile quarter. Originally, our expectation was it would be much worse. Our consumer balance sheet was up 47%, commercial 46%, and rural 122%.

Your SME loan book grew 10%.

We took cautious stance on SME and cut segments and sub-segments. We are slowly coming back. But we have to see if SME is ready to borrow. There is slowdown in demand. We should see momentum coming back as we move into the quarter. In the first half, we were showing a 40% growth.

Do you expect impact of demonetisation to continue in Q4?

Volumes have returned but value has not. We expect commercial and rural to grow. We should continue to see the momentum of pre-demonetisation growth.