Bajaj Finance has become the country’s largest deposit-taking non-banking financial company (NBFC), with its consolidated deposit book crossing the Rs 50,000-crore mark in July and the number of depositors rising to 500,000.
“The sweet spot for the company was 44 months, where it offers an interest rate of 8.60% for senior citizens and 8.35% for others. Our strategy has always been to offer investors long-term savings solutions through our fixed deposits,” said Sachin Sikka, executive vice president – fixed deposits & investments, Bajaj Finance. The liquidity buffer as of June-end was Rs 12,704 crore, he said.
After the HDFC Bank-HDFC merger, Bajaj Finance is now the largest deposit-taking NBFC in the country. Shriram Finance, Mahindra Finance, and LIC Housing Finance are among the other large deposit-taking NBFCs.
The company started accepting deposits in 2014 when its balance sheet size was Rs 17,000 crore. The idea was to have diversified asset as well as liability bases. Over 10 years, it has grown the deposit book at a CAGR of 60% and depositor count at a CAGR of 49%.
The instruments Bajaj Finance uses to raise funds include non-convertible debentures (NCDs), deposits, short-term commercial paper, and bank loans. NCDs account for 36% of the borrowings, followed by bank loans at 31%, deposits at 21%, and short-term borrowings at 12%.
The company offers interest rates of 7.40% for 12 months and 7.55% for 24 months. For 36 to 60 months, interest rates are 8.05%. Senior citizens get up to 0.25% extra on these rates.
“Deposits have grown 2x in the last two-three years. Some of this was a function of attractive interest rates, but a large part of it was the trust that customers placed in the Bajaj brand. Our seamless process of both origination and service through digital journeys on the app and the company’s policy of depositing the money back into the customer’s account on maturity have resulted in negligible unclaimed deposits,” Sikka said.
Two-thirds of the deposits come from retail customers, with the rest being corporate. Around 40% of depositors are senior citizens who generally place around 65-70% of their investments into deposits. The company has also seen a significant number of its customers across age groups opting for FDs through digital channels.
In Q1, the cost of funds was 7.61%, a sequential increase of 22 bps. The deposits book grew 46% year-on-year and stood at Rs 49,944 crore as of June 30. The net deposit growth in Q1 was Rs 5,278 crore.
The company has the highest credit rating of AAA/Stable for its long-term debt programme from CRISIL, ICRA, CARE and India Ratings; A1+ for its short-term debt programme from CRISIL, ICRA and India Ratings; and AAA (Stable) for its fixed deposits programme from CRISIL and ICRA.
Bajaj Finance has been assigned a long-term issuer rating of BBB-/Stable and a short-term issuer rating of A-3 by S&P Global Ratings for the external commercial borrowings programme.