In an interview to CNBC-TV18, Rajeev Jain, managing director, Bajaj Finance, shares his views on the company's growth in Q1 and his outlook for the days to come.
Below is the verbatim transcript of Rajeev Jain's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.
Ekta: Wanted to start with cost of funds, how much have cost of funds reduced for you and how much more do you anticipate possibly in the remaining part of the fiscal?
A: Clearly a large part of the cost of funds reduction that is emerging for us is as a result of reallocation between bond markets and banking markets. As you have been aware that banks have been slow to do transmission so 45 percent of our balance sheet which used to come from bond markets now 60 percent of it is coming from bond markets. As a result we have seen benefit of 25-30 bps in our cost of funds since April this year. However, more as a result of change in mix from borrowing rather than benefits in terms of pass through.
Anuj: So how much more of a softening do you expect in cost of funds and hence impact on your net interest margins (NIMs) and spreads?
A: Clearly, it will be a lag from hereon. If the rates do get cut, which is likely, it would depend on what the rate cuts are. With a lag effect, we should see at least 25-30 percent of that being transmitted in our balance sheet in a six months horizon. So it will be very slow is how I would articulate it as.
Ekta: Let us get talking on the business then, how is overall business sentiment looking and you had a strong assets under management (AUM) growth in FY15, what is it tracking now?
A: Q1 was strong for us. I think the first two months so far have been reasonably strong as well as a company. So we are looking at the balance of the year with cautious optimism I would say at this point in time. We are growing in all our lines of businesses across consumer, small business, commercial and rural. So we are looking at the balance of the year with reasonable optimism.
Anuj: How is the consumer and commercial segment doing in terms of incremental disbursement?
A: Fundamentally if you look at the broader level, the growth in Q1 was driven by growth across all four categories of our businesses, consumer, SME, commercial and rural. We are seeing a reasonably secular growth across all four of our businesses at this point in time as well.
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