Non-banking finance company Bajaj Finance aims to grow its net profit and asset base between 20 – 25 percent this financial year. Rajeev Jain, CEO of the Pune-based firm said, the guidance may be raised if April – June numbers are better-than-expected.
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"Since last four quarters, we have been deliberately bringing down the share of commercial lending. This includes loans for construction equipments and infrastructure sector as well as vendor financing. However, the level of default rates has stopped rising. Hence, we will again start increasing our credit exposure slowly," he told moneycontrol.com in an exclusive interaction.
During the fourth quarter, commercial loan disbursements plunged 45 percent year-on-year to around Rs 700 crore out of total disbursements of Rs 5,106 crore. In 2012-13, the bank reported 46 percent to Rs 591 crore.
Asset under management (AUM) rose 34 percent to Rs 17,517 crore in 2013-14.
"Our company reported good set of numbers based on three factors: volume growth, better disbursements and credit quality performance. Our non-performing assets remain in the same range for quite a few quarters," Jain said.
Gross NPA ratio marginally rose to 1.09 percent as against 1.05 percent a year back while net NPA ratio stood at 0.19 percent compared with 0.12 percent during the same period.
Explaining the reason behind the 40 percent rise in borrowing costs he said that some long term borrowings were matured during the year. Subsequently, those have been replaced by higher cost of borrowings.
The company raises funds through bank term and working capital loans to the tune of 53 percent. Debt market instruments like commercial paper (CP) or non-convertible debentures form the rest 47 percent. The ratio, according to the CEO, would be 50:50 between bank loans and debt market by the end of March 31, 2014.
Meanwhile, Bajaj Finance had launched its first home loan product in February, 2013. The company aims to sell the product to the salaried class across 30 cities in India.
"We are looking at salaried people with an annual income of Rs 15 lakh each. We lend for house properties priced in the range of Rs 75 lakh and 1 crore. We would like do a business of Rs 750-900 crore by FY14. Later, we may expand the reach of product based on business growth," Jain said.
Bajaj Finance is keen on banking licence. It is still evaluating the business proposition. It is awaiting for further clarification from RBI on banking licence.