On Tuesday, Bajaj Finserv, the financial services arm of (Rahul) Bajaj group, announced an impressive 46% jump in its third quarter net profit to Rs249 crore, helped by strong performance of all its subsidiaries. Although the overall show was consistent with and comparable to previous quarters, certain segments like the life insurance business continued to show signs of weakness. Sanjiv Bajaj, MD of Bajaj Finserv, explained to Megha Mandavia how the firm plans to further improve its fortunes and face future challenges. Excerpts from the interview:
The life insurance business is not picking up so well. New business premium is only marginally up. Why?
The life insurance business in the industry in the past year-and-a-half has gone through a very difficult phase because of significant competition as well as changing regulations. Even this year, if you see, the industry has seen a fall in business on the new business side. We have shown a 2.5% growth. So, compared to the industry, we are starting to do better.
When do you see a pick-up in the life insurance business?
The bottom has been reached already. We’ll start seeing growth from the next financial year.
Your commercial business (lending to infrastructure projects and commercial equipment) has taken a beating...
The business has not taken a beating. We’ve consciously slowed down on new business lending in the commercial segment because there is a slowdown in the economy. We are just being conservative. We want to protect the quality of assets. We’re being very careful about the new business.
When will you start lending aggressively to the segment?
We are still very cautious. We’ll see what happens in the larger economy and only then we’ll decide.
How are you preparing to get a banking licence?
We’re following the process closely. We want to first see the final guidelines and then decide what’s the next step.
Many non-banking financial companies – NBFCs – are realigning their businesses to fit the draft guidelines issued earlier. Are you doing the same?
I think it’s too premature to do that until the final guidelines are out. We don’t want to be presumptuous.
How much impact do you see from the Reserve Bank of India’s Usha Thorat Committee’s guidelines for NBFCs?
In our case, there is almost no material impact. Our provisioning guidelines are much tighter than what NBFCs are required to have.