Thursday, September 15, 2022

Building More Financial Institutions at Scale: Sanjiv Bajaj's Solution to Building Financial Inclusivity

The scale of the Indian finance sector has transformed over the past few years, especially instead of rampant digitization; the rise of online payments and increased internet penetration has been unprecedented. Yet, more must be done if millions of people are brought under the ambit of 'financial inclusivity.'

As long as the bottom 40% of India's population remains excluded from financial services, India can not become a developed country. Many famous finance personalities in India have echoed this sentiment – but Sanjiv Bajaj, the Chairman and Managing Director of Bajaj Finserv, has been the flagbearer in many ways.

The recent spate of inflation, leading to uncertainty, can be detrimental to the common man's financial security – more so for those who remain underserved by the financial system. 

But Sanjiv Bajaj remains confident that the coming decade can still be favorable for India, as long as it creates the capacity to build more financial institutions like Bajaj Finance and prominent private banks – tens of them.

Often featured prominently in the top industry leaders list, Sanjiv Bajaj urged the Reserve Bank of India (RBI) to keep inflation in check. Raising high-interest rates would hurt the market. In 2022, the RBI raised the repo rate by over 90 basis points.

Who is Sanjiv Bajaj?

Sanjiv Bajaj is the Chairman and Managing Director of Bajaj Finserv – the financial services arm of the Bajaj Group that has contributed immensely to India's growth over the past century.

As a 4th generation entrepreneur and one of the leading finance business leaders in his own right, Sanjiv Bajaj has been instrumental in nurturing Bajaj Finserv for over a decade to become India's top financial services company. 

With a digital-first, differentiated, community-centric approach that puts the customer first and a culture that values excellence through innovative disruption, Mr. Bajaj is known for being the first to offer digital consumer financing, which helped change the financial services industry in India.

He is also the President of the CII (Confederation of Indian Industry) for 2022-23. He has been with CII at state, national and regional levels for many years. 

His efforts in guiding the financial ecosystem of Bajaj Finserv and working relentlessly in making his products and services reach every Indian household has firmly established him as one of the top industry leaders in finance. 

He is known for his insightful views on the industry, policy changes, reforms, and everything linked to the financial health of the country and the population – and truly believes that India needs more than 10 Bajaj Finances and HDFC Banks if India is to realize its true potential.

Why does India need 10 more Bajaj Finances?

The answer to this question is rather simple: India needs to expand its financial services footprint so that no one remains unbanked or underbanked, especially in the digital age.

In a recent interview with ET Now, Sanjiv Bajaj shared his views on the country's economy and inflation. According to him, the employee rate incentive plans, PLI scheme, private sector capital investment return, and debt reduction in the banking sector can help India in the medium term.

Since the outlook for the world has not changed and the government is not likely to cut spending, the RBI has to lead the race against inflation. Sanjiv Bajaj also thinks India will continuously see high inflation with increased interest rates. 

In addition, India could expect a monsoon, bringing inflation down by 50–75 bps and helping reduce food prices. He attributes this as another reason India needs more than 10 Bajaj Finances.

Like other top industry leaders, Sanjiv Bajaj also thinks that problems in the supply chain will keep pushing up inflation, which is already high because of how the economy is set up. 

The Indian government is also working to lower import taxes and control exports when necessary. But the general population needs to regulate oil and food prices in India, and home ownership needs to go down for middle-class Indians.


India needs more large-scale financial service companies like Bajaj Finance - the most obvious solution to the country's challenge in enabling financial security for 1.4 billion people. This is all the more important as inflation is here to stay and often heavily depends on factors outside India's control.

In light of this, Sanjiv Bajaj has also listed four factors that will be important to developing robust financial services. The first is getting financial services to people who do not have access to them yet. 

Second, we need to build up our skills. India needs more non-banking financial companies (NBFCs) and banks. Third, innovation will make a big difference as India is working hard toward becoming an economic champion. 

The fourth factor is the desire to create bigger things on a global scale. Once these parameters are accomplished, India can steam ahead, ace its financial inclusivity goals, and crank up the economic engine from its slumber.

Despite the advent of fintech and the rise of digital finance in India, many population segments remain underserved. As their needs for financial inclusivity and security grow – especially in light of growing inflation – so will India's need to build more financial services institutions. 

Sanjiv Bajaj – one of the most revered financial leaders of our age – has chipped in by saying that India needs 10 more companies like Bajaj Finance to realize its true potential. 

In this blog, we delve deeper into understanding the reason behind the need for more finance companies and the way forward.

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