The best period for India is over the next 15-20 years, says Sanjiv Bajaj

The company, which took 13 years to see its assets grow to ₹1 trillion, is already adding ₹1 trillion annually, according to Sanjiv Bajaj, chairman and managing director of Bajaj Finserv, the financial arm of the Bajaj Group.

Speaking to Mint, the billionaire businessman said the company is exploring new market opportunities after Allianz SE’s exit from its insurance subsidiaries. He also spoke at length about the company’s plans for a seamless leadership transition as Rajeev Jain steps into the role of vice chairman at Bajaj Finance Ltd, and also succession at the group.

Edited excerpts from the interview:

Bajaj Finance stock has outperformed peers and even non-financial companies. Can it continue this performance by maintaining the same growth and margins?

We have never really charted out a plan to say we must grow at a particular rate or we must earn so much profit. Those are more guiding factors. What drives us is really: How do we increase the penetration of financial products in the country? That’s why you can see that on the Bajaj Finserv app, while you have our lending products, we also cross-sell insurance and mutual funds, so that we can spread low-cost financial solutions across India. The opportunities that we have seen in the market enable us to grow. There could be periods where we need to slow down.

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Fortunately, because we are diversified across multiple product lines and different types of businesses, it allows us to press the brake… [or] accelerator when it makes sense. Once you get to a particular size, incrementally your growth levels do come down, but the absolute volume of growth goes up dramatically. It took us, from 2007 when we started, nearly 12-13 years to get to a ₹1 trillion AUM (assets under management), and now we will add about ₹1 trillion AUM every year. So, that is the change.

Do you still see a lot of opportunities and that the best period is not behind you?

I think the best period for India as an economy is going to be the next 15- 20 years. We are now at $2,700 -$2,800 per capita. We have seen in economies around the world that once it reaches about $3,000 per capita, then for the average consumer, your basic money for your basic needs is taken care of. If the market is able to provide good financial products and solutions, that becomes a multiplier on a person’s savings, rather than keeping the money just in gold or in a bank account and earning less-than-inflation returns. Economies that do that well then see a multiplier effect in the individual’s or the small businesses’ wealth, which propels the economy going forward. You can see how our mutual fund industry has grown in the last 4-5 years. I also believe that the world is changing; India is looking at a number of bilateral trade agreements. This will open up a lot more trade opportunities for India.

Rajeev Jain has been appointed vice chairman with an executive role at Bajaj Finance. It seems, there is continuity. Would you like to elaborate on that?

The role of any board is to ensure, at an appropriate time, an orderly transition of management as best as one can do, [and] proactively build leadership and capability so that even if somebody leaves the organization, you are able to fill that up with minimal risk. Nobody can say 100% about anything, but it should not come as a surprise. We have been trying to create a deep bench of capable younger leaders; we identify them early, we move them around various jobs …so that they have a very good experience across multiple areas. Given the fact that Rajeev has been in that role for over 17 years, we saw the opportunity for an orderly transition [to the role of vice chairman at Bajaj Finance].

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Anup (Kumar Saha) has been with us now for over seven years. [In the past] few years, he has been running most of the businesses. He will take over as MD from 1st of April. And Rajeev still continues to provide mentorship to work with me and with Anup on strategy. We have also taken him in as a non-executive director [of Bajaj Finserv] and will provide some mentoring and assistance there to some of the businesses as well. We are again building out for the next 10 years–what we need to do in as much of an orderly way as we can.

Does the exit of Allianz give you more freedom to do other things?

In a few areas. For example, NRI money and dollar policies. We think there is an opportunity for the NRI base in Africa. The life insurance business already has a small presence in the form of distributors in the Middle East. These are the types of things we will expand. And, anything beyond that, we have not planned right now. The main thing, I must say, [is that] Allianz has always been a supportive partner. But the business has been run by the board and the Indian management team. That’s why nothing changes over there. What it will also permit us to do is to cross-pollinate best practices across the group in a faster, more informal manner.

What would be the primary reason for the 24-year JV to end?

Both partners have very good plans for India: significant interest and commitment, but different strategies to get in there.

What did Allianz bring to the table?

A high quality, long-term focused partner, without whom we would have not started the insurance companies because we knew nothing about it. Also, a partner that put a lot of confidence and trust in us in building the business. And because of their global capabilities, in the early years, they were able to handle the business. In the last 15 years, it’s really the Indian management and the board that has run the business. But [if] any support [was] required, they were always there to provide. But one didn’t need it because the Indian team was self-sufficient.

Do you think Bajaj Finserv will look at diversifying its investments outside finance and becoming the Berkshire Hathway of India?

Our focus at Bajaj Finserv is to really build financial services currently in India. We see the opportunity to be tremendous. We are not in a market that is growing at 1 or 2% [and] where we have to think of other markets or other opportunities. And the Berkshire model is actually very different from us. We are an active player in financial services, whereas Berkshire has used the capital from their insurance business to build a very large investment business, which they don’t actively manage. They are … large majority investors. So that strategy is different from ours.

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In a market like India, you need to be an active manager. And that’s where the balance of a promoter brings in control and support to …work with a good-quality management to build businesses for the long term [and] invest in the right kind of capabilities; and not to be worried about one or two quarters or one or two years, but at the same time not to get complacent. This balance one needs to achieve well.

What is the thinking behind getting the promoter family as part of the Allianz deal?

As we negotiated with Allianz, we were very clear that as far as possible, given that we have old partners … to very good quality businesses, we must create a win-win deal for both. For Allianz, one of the main priorities was that India is an important market and that’s why they want to build their plans for India as early as possible. This meant that we needed an agreement which could have been executed, once we got regulatory approvals, as fast as possible. For us, it is FinServ. We own 74%. We will go to 75%. That gives us absolute control of both the insurance companies. But being a CIC, neither would we be sitting on large surplus funds nor are we allowed to borrow. I think IRDAI does not allow you to borrow to increase your stake in the company. Hence, two of our group companies stepped up. Bajaj Holdings and Jamnalal Sons do sit on surplus cash and investments. They will come in to ensure that the transaction moves with speed and with a high level of certainty.

In the coming years, do you expect insurance businesses and asset management to get listed?

Both insurance businesses are very well capitalized. Both, of course, have to go through this whole transition now with Allianz’s exit. As we get past that, depending on the growth of the business in the coming years, plus the regulator’s own outlook, we will take a call at the right time.

The promoter-professional relationship with Rajeev Jain was built over the last 17 years. Can you elaborate on the high and low points in the company?

We were just a bunch of youngsters determined together to build high-quality businesses with complementary roles. Our role was more focused on strategy and governance. [To] make sure that we put in place good-quality teams who are driven to build something special, who come to work every morning with excitement… [and] build the best business or the best technology tool or the best distribution.

Also read | Bajaj Finance MD Rajeev Jain seeks to stay involved in shaping strategy as term nears end

And give them the freedom to do that. At the same time, put in place a governance mechanism where if the risk gets too high; we are there to support, to work with our boards to create that culture. And, I think we have very successfully created this culture with a high degree of empowerment and ownership. And part of our responsibility, as we are all now in our mid-50s, is that we create the next generation of leaders.

Do you have a pipeline of leaders?

Yes, very much so. We have a pipeline of leaders ready to take on CXO roles today. Those who need 12 to 24 months of greater exposure and experience. We do this at the group level, we do it for 400 leaders across our companies, and then each company will do it even deeper.

You were talking about next-gen leaders. Would your children look at taking any role in the company?

My children are still studying. It depends upon their interest. As we said, this is a different generation. Currently, both seem to be interested to come back. They worked with us, interned with us as well. But who knows? And what is important for us is even if you see today under Bajaj, we have made operating businesses. All are run by professional CEOs and teams. Our role as promoters is how do we guide them, empower them and build businesses for the long term. If somebody from the family wants to come in, they have to have the capability to rise through the ranks. Of course, they have an advantage over the last name. My daughter is doing her MBA right now. She worked for a few years in Bajaj Finance. She will finish her MBA in the summer of 2026. It depends on what she wants to do. Kids have their own minds.

Have you sorted out the spam call mess?

[The number of spam calls] is very clearly getting fewer, and most of it is not our authorized teams. These are outside teams. We routinely bust fake call centres that pretend to lend or give loans and insurance. This, we have done in cities. The authorities, of course, do it once we complain.

Do you still see pain on the rural side?

I think the pain has bottomed out. In the coming quarters, we should gradually start seeing growth improving. But to me, that is not our challenge [as] between the government and the regulators, they understand how to handle it very well. Our challenge is how we can grow at 8% to 10%. A 6.5% to 7% is a good growth rate, but 8-10%, if we can do that for 20 years, will put us in a completely different orbit. That’s what we must challenge .. and push ourselves to do.

You think that’s feasible?

One hundred percent. It is feasible but requires a different mindset. The government is gearing up for it; our states have to gear up for it. We have to play the external opportunities smartly because they have opened up. In the last 40 years, the world just went to one country. As trade blocs are opening up, we have to play this smartly at the level of the government and then as industry and financial services sector to ensure that we can enable each other.