We expect 25% loan growth for FY14: Bajaj Fin

Earlier, in an to CNBC-TV 18, Rajiv Bajaj, Director of Bajaj Auto, had spoken about his intent on converting Bajaj Finance from a non-banking financial company into a full-fledged bank for which they have already applied for a licence.

Below is the edited transcript of Rajeev Jain interview on CNBC-TV 18

Q: Can you take us through the margin picture?

A: Overall margins were stable. I just want to clarify one thing that profit after tax (PAT) was up 21 percent; however we took an accelerated provisioning in Q3 which is a one-time number, adjusted for that it would have otherwise been a 30 percent profit growth.

Q: This accelerated provisioning is so that you get to the 90-day norm, is it in preparation for that?

A: Yes that is correct. All our businesses essentially are on 90-day provisioning standard as a company.

Q: Are you completely now on 90 day?

A: Yes, we are largely there, that’s what I would say. When I say completely -- less than one odd business which has a small contribution to our balance sheet.

Q: So we should not expect accelerated provisioning hereafter would you say?

A: Yes, that is correct.

Q: Can you take us through the trajectory of bad loans itself? You seem to have done an amazing job because your gross NPLs have barely risen by 1 bps, not even worth mentioning. You have held it flat. Net NPLs are if anything a little lower. Do you see any stress at all?

A: I would say that looking at the external environment we have essentially been trimming the bottom 5-7-10 percent of our businesses on an ongoing basis over the last 15-18 months and that has helped us ensure that we stay out of trouble and that has been the story in the current quarter as well. At this point in time we are not looking at a difficulty in our loan book as we speak. So we are quite comfortable at this point in time.

Q: Your commercial loans are down 15 percent how do you see that trend?

A: They have been down now for two years. We saw much early on that commercial businesses are going through a very rough weather. We have largely infra and infra commercial business sitting in a commercial business. So, we pulled the plug on those businesses virtually two years ago. That is part of the earlier point that I made that we have been very cautious about the way we have built the business. You will continue to see commercial businesses not grow even for the next two to three quarters.

Q: What do you expect your loan growth to be for the full year? What exactly is the margin number and how much might it be at the end of the year?

A: Loan growth we have been at close to 30 percent, but on a full year basis the overall discretionary and non-discretionary continues to slow very rapidly. We think Q4 will be tougher than the first three quarters given what we see on the ground. So it would be lower than the first three quarters, which is reasonably clear to us at this point in time. So you could say we would definitely hold full year at 25 percent. Now whatever is upside that will be depend on how the environment improves on the ground.