We plan to lend against shares as well: Sanjiv Bajaj

Bajaj FinServ, the Bajaj group’s financial services arm, reported a three-fold rise in consolidated profits during the quarter ended December 2009. In an interview with ET NOW, Bajaj FinServ MD Sanjiv Bajaj sums up the performance in the last quarter and his plans for the company going forward. Excerpts:

Give us a sense of how the new business premium growth has been in the last quarter.

The new business premium is relevant for the life insurance business where we have shown a 10% increase on the new business premium and a 14% increase on growth premium. If you look at the general business, while our gross premium is flat at Rs 583 crore, profit is up from Rs 17 crore to Rs 29 crore. In the consumer finance business, we have shown a growth in gross income from Rs 158 crore to Rs 250 crore. Profit has grown handsomely from Rs 11 crore to Rs 27 crore. So across businesses, we have seen a significant growth in bottomline.

In the light of Irda norms capping those ULIP charges, what kind of impact do you see in terms of your profit margins and what kind of new products will you be focusing on now?

We have refined our products for them to fall in line with the charges of Irda but most of our products were by and large in line and as a result, we do not expect to see significant difference going forward in our particular case.

Tell us about the new segments Bajaj Auto Finance is looking at to grow the loan book because analysts feel that the lack of access to deposit base may constrain expansion of your loan book size.

We have seen significant growth both at the low and unsecured business, which is consumer durables. I believe we are one of the financiers of consumer durables across the country and we are present in 50 cities. So that portfolio grew well particularly during the festive season and has continued even through December. In addition, on our secured portfolio, which is loan against property, we have seen steady growth. We are doing almost Rs 100 crore of business in a month. We are seeing very stable growth across businesses outside of the two-wheeler business. The two-wheeler business is only captive to our own products and there again, after restructuring the internal processes and team last year, we are seeing very handsome growth in this quarter.

What are your plans for new business initiatives? You are considering entering equipment finance as well. Is that going to be largely in the construction equipment space?

Absolutely right, we see a significant opportunity overall in the construction equipment segment. We are looking forward in the first quarter of the next financial year to enter the segment and we are currently building the team on the construction equipment financing side.

In addition, we currently do loan against shares, but we only do promote our funding over here. We are building the team and the IT platform so that again in the first quarter next year, we are ready to start retail loan against shares as well. So, these are two new businesses that we expect to start in the next quarter.