Bajaj Auto’s arm gets RBI nod to commence NBFC operations

Bajaj Auto Consumer Finance, the wholly-owned subsidiary of Bajaj Auto, has received the Certificate of Registration from the RBI to commence the business of non-banking financial services, the company notified the exchanges.

Shares of the company rose 1.8 per cent to touch an intraday high of ₹4,699 on the NSE. The stock later pared some gains to close 0.8 per cent higher at ₹4,649.35.

Bajaj Auto had, in October 2021, announced setting up of a wholly-owned captive finance subsidiary, Bajaj Auto Consumer Finance, to offer financing solutions for vehicles manufactured or endorsed by Bajaj Auto and associate entities. The NBFC will not be allowed to accept public deposits.

The NBFC is likely to impact the Group company Bajaj Finance, which depends on the distribution network of Bajaj Auto to source two-wheeler, and new and used car loans.

In April 2023, Bajaj Finance MD Rajeev Jain had said that Bajaj Auto’s NBFC is likely to take another year to be set up till which time Bajaj Finance will build its own non-Bajaj portfolio.

“It’s 5 per cent of our balance sheet today, which is essentially captive. We’ve also started open architecture two-wheeler financing,” he had then said when asked about the expected impact on Bajaj Finance.

Bajaj Finance launched its open architecture vertical for two-wheeler finance in June-July, wherein the company is adding 11,000-13,000 new accounts every month, with the aim of adding a total of 2.5-3.0 lakh non-Bajaj two-wheeler loans in FY24.

CFO Sandeep Jain had said that Bajaj Finance moves a significant volume for Bajaj Auto and “remains a large partner for them”.

Of Bajaj Finance’s total active distribution network of over 1.67 lakh touch points as of June 2023, around 5,350 were Bajaj Auto dealers, sub-dealers and associates, 3,300 were non-captive two-wheeler dealers, sub-dealers and associates, and about 650 were new auto dealers.