Bajaj Auto applies for new NBFC

Bajaj Auto (BAL) has sought RBI approval for setting up a new NBFC. The application is currently under consideration by the regulator.

  • The proposed NBFC is for captive financing of Company’s two wheelers and three wheelers.
  • Currently more than 40% of BAL’s vehicles get financed by Bajaj Finance (BFL, the group company), which in turn accounts for 5% of BFL’s own Balance Sheet.
    • BFL was incorporated in 1987 as a captive NBFC for BAL. A decade later, it got listed on stock exchanges, expanding to consumer finance, SME lending, commercial credit, rural lending and deposits.
  • BFL, which was traditionally focused only on captive BAL’s business in 2 wheelers and 3 wheelers, started funding other brands in June 2022.
  • BAL then announced to set up a new NBFC for captive business for which it has now approached RBI for the licence.

Prima facie, BFL’s investors are bound to get ‘little’ concerned with this.

However, given BFL’s size, targeting a bigger market (and not only BAL) was logical.

BAL as well is not at fault of trying to set up a more focused financing arm for it’s own vehicle buyers.

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