Bajaj Finserv is starting a rural lending business this year, says Rajeev Jain, chief executive officer. In an interview with Vishwanath Nair, he speaks on the company?s past performances and what he expects from the current financial year. Excerpts:

Any new business you are targeting this year?

We are looking at launching a rural lending business this year, which will be our only addition. We are starring it in 13 towns in Maharashtra. We will offer gold loan and refinance against assets. Its contribution to disbursements and income will be non-material, but it is an important business line that we see from a future growth standpoint.

Is this rural foray because of your bank licence aspirations?

There is no such thought process as of now. Will it help us if we become a bank? Yes. But this is not being driven by our bank licence aspirations.

What is the status of the application on the banking licences front?

Reserve Bank of India (RBI) was supposed to list down a frequently asked questions (FAQs) that various aspirants had asked. That will help us in a big way. RBI, in the past, had given, to the existing non-banking finance companies (NBFCs), some level of dispensation on agriculture lending targets. Those are the key questions we are waiting to hear from RBI.

How has the January-March quarter been for you? How is the asset quality holding up?

It has essentially been a strong quarter for us. We ended with assets under management of R17,500 crore, overall profit after tax (PAT) for the year inched up to R591 crore, which is a growth of 46% year-on-year. The fourth quarter was strongest. It grew by 52% from a PAT standpoint. Deployments crossed R5,000 crore in the quarter and income crossed 35% growth. The gross non-performing assets (NPAs) were at 1.09% and net was at 19 basis points. We are very stable on the asset quality front. We would have been at 15-18 bps on the net NPA in the previous quarter. It is our view that there is bottoming out in the overall default rates, we have clearly seen that.

Which sectors contributed to the growth?

Consumer and small and medium enterprises (SMEs) have contributed to the growth. The consumer business grew 39% and SME rose 49%. Commercial business, as part of our cautious strategy, has slowed down 31% against last year. A large part of the commercial business is infrastructure. We have taken a view to slow down the growth of that business. The level of defaults in this sector have clearly gone up, the overall leverage of those customers is also high, so it was a conscious stance by us to reduce our exposure there. We have two components there, construction equipment financing and infrastructure lending, both have slowed down.

How is your home loan business doing? What are your targets this year?

We have been doing the home loan business for self employed people for last three years. It is a very stable business and growing very well. In January, we launched home loans for salaried customers as well. We are targetting R3-3,500 crore worth of disbursements purely through mortgages this year.

What is your outlook for FY14?

FY14 will not be at this level. We are expecting about 20-25% growth on net income, during the year. Based on the momentum we see at the end of the first quarter, we will revise this number. At this point in time we are reasonably comfortable.