Around 27% of Bajaj Finance’s consolidated AUM under moratorium

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Published: May 20, 2020 2:38:46 AM

Managing director Rajeev Jain said of that 27%, 68% customers have no recent bounce history, which means they did not default in January, February and March.

Bajaj Finance holds 1.6% of total standard asset provisions, which works out to Rs 2,352 crore.Bajaj Finance holds 1.6% of total standard asset provisions, which works out to Rs 2,352 crore.

Around 27% of Bajaj Finance’s consolidated assets under management (AUM) were under repayment moratorium as on April 30, the company’s management has said in an analyst call, adding that not all applicants for the moratorium were extended the facility.

Managing director Rajeev Jain said of that 27%, 68% customers have no recent bounce history, which means they did not default in January, February and March. “We chose to not give moratorium from an accounting standpoint to those customers who had high likelihood of default,” Jain said, adding, “Our entire focus at this point is on mining our base as the new-to-Bajaj customers have always been riskier. We are using the franchise to do more with them. So, the focus will remain for the foreseeable future on existing-to-Bajaj customers.”

The company has used the last 60 days to significantly augment its collection capacity so that as the markets start to open, it is ready to rapidly move and engage clients to be able to collect efficiently and effectively. “We are not waiting for it to open; we are adding close to 2,800 officers in the company to this activity,” Jain said.

There are no clear signals emerging on the demand scenario yet, the management said. “(Our) experience is that every market is structurally run by district collector or DMs. We do see some spike when we open the market, but they do not represent demand,” Jain said. He explained that while there was a sudden demand for things like dishwashers and iPads, that demand is not structural. Demand will come back if customer confidence comes back. “The economy was on the mend and we were clearly seeing it. The worst was October and November last year and things turned a corner since December. We are 60 days into it and the longer we take, the longer will be the time for the economy to come back,” Jain said.

In terms of credit cost, the company has entered the Covid era with a ‘clean slate’, Jain said. “On a y-o-y basis as on February, other than our two-wheeler and lifestyle businesses, we were same or better off. Across our 13 lines of businesses, only two were yellow or red and the rest 11 were green,” he added.

Describing Covid as a once-in-a-100-year shock, Jain said the company has taken Rs 1,419 crore in provisions. There were three elements to this. One was an annual expected credit loss recalibration to the tune of Rs 129 crore, the second was Rs 900 crore of general Covid contingency provisions and the rest was against two large identified stressed accounts — IL&FS and Karvy.

Bajaj Finance holds 1.6% of total standard asset provisions, which works out to Rs 2,352 crore.

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