'The only business was to finance Bajaj Auto's products and then when Sanjeev took over...': Rajiv Bajaj on transformation of Bajaj Finance

Rajiv Bajaj says his brother Sanjeev led Bajaj Finance's transformation.

Bajaj Auto's MD and CEO Rajiv Bajaj in an interview for Moneycontrol's series "Latha & the Leaders", recalled how, at the time of its inception in the late 1980s, Bajaj Finance's sole purpose was to finance Bajaj's two- and three-wheelers, and for almost 15-20 years that was the only business that the company had. But, then came his younger brother - Sanjiv Bajaj.

He shares, "When Sanjeev took over, he led the transformation of the company. And you have seen the results of that, they went much beyond that brief. And progressively, Bajaj Auto's business was under 10 percent of Bajaj Finance's business."

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Elaborating on the shift in company's approach and the resulting "asymmetry" between the two companies and its managements, he said, "From Bajaj Auto's point of view, almost half of its motorcycles sold in this market -- and I think perhaps a third of its three wheelers, are financed by Bajaj Finance."

"Now, when this asymmetry happens, you know, between two companies and therefore two managements, the kind of focus again, we come back to narrowing your focus, less is more and stuff like that. The focus of the Bajaj Finance management upon our business was not proportionate to our own focus on that same matter," he adds, saying financing is a "very big competitive lever in the market place".

The Bajaj Auto MD and CEO recalls how, in 2010, he had told his father — former Bajaj Auto chairman Rahul Bajaj — that this duality could lead to a conflict in the future from a business point of view. And the solution, he suggested, was a separation of the two businesses.

To this his father responded with disdain. "He just shut me up. He said, 'I don't want to start another company. I don't want another board. I don't want another six board meetings," Rajiv says, adding that his father was also wary of rumour-mills talking about a split in the family business.

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So, the separation was set in motion only after Rahul Bajaj's passing away in February 2022. He informs, "It took us 18 months to get RBI approval. And then we started off so that we can have an NBFC. And that is the guardrail provided by RBI also — (that) 'your only business activity will be to finance Bajaj Auto products'. So that's the only purpose, very sharp focus, but a very important competitive lever for Bajaj Auto."