Bajaj Finance plans to scale up presence in 1,000 cities for B2B segment

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As a step to entrench consumer finance, Bajaj Finance Ltd plans to scale up activity in the Business to Business (B2B) segment, both by volume and value, by adding up to 1,000 cities in the next three years. This would grow its presence to 5,000 cities.


The expansion activity will be more in Northern and Eastern India. The company is expanding its network in Uttar Pradesh (UP), Eastern and North Eastern parts of the country. Four years ago, the company was in only 15 cities in UP; today, it is in 450 cities and eventually plans to be in 700 cities in the state, Anup Saha, executive director, BFL told Business Standard.


Its total lending branches have grown to 3,828 in June 2023 from 3,586 in June 2022, 3,113 in June 2021, and 2,408 in June 2020.


While B2B accounts for 90 per cent of its customers, it constitutes only 10 per cent of its assets under management (AUM), given that the tenor of such loans is shorter. It is called B2B because it is driven through relationships with dealers and presence at counters in their stores. The B2B segment comprises retail lending for consumer electronics, durables, and lifestyle products space.


In Q1 FY24, B2B disbursements were up 37 per cent at Rs 22,625 crore as against Rs 16,502 crore in Q1 FY23. Its AUM stood at Rs 2,70,097 crore at the end of June 2023.


Saha said the company’s business accounts for 1.64 per cent of India’s total credit and 2.52 per cent of India’s total retail credit. In the next three to four years, the company expects its business to grow to 2.72 per cent of India’s total credit and four per cent of India’s retail credit.


The company originates customers through its B2B business. The B2B mix in AUM will remain range-bound. However, the growth rate is higher. The growth rates for both urban and rural areas obviously depend on the underlying economic drivers as well as the credit parameters that play out, given that they are distinct markets.


The rural business started much later and thus continues to provide greater opportunities for distribution and customer expansion. Therefore, this segment is expected to grow at a faster pace due to its smaller base. Urban B2B will continue to grow as well, as evidenced in the Q1 FY24 numbers, which show that BFL have gained three to four per cent market share in this business segment, Saha said.