Things have changed rapidly, particularly on the technology front, over the past 10 to 15 years. How did Bajaj Finance adapt to the changing world?
Our focus was always on customer differentiation. The challenge for us was how to stay ahead of the curve. So we spent a great deal of time and effort early on in technology and data. We realised that every time we set up a branch, it added costs. So we had to find a Cloud-enabled solution.
In 2008, we approached Salesforce — when most people had not even heard of Cloud technology — because they had a Cloud-based customer relationship management (CRM) solution. We wanted to convert that CRM solution into a loan origination platform. Effectively, that meant we could go anywhere in the country, open a laptop, and instantly have a branch. That is why today, if you look at even the best banks, their cost-to-income ratios are 43–44 per cent, while ours is 34 per cent.
Bajaj Finance adopted artificial intelligence (AI) much earlier than others. What productivity gains have you seen?
During the third (October–December/Q3) and fourth (January–March/Q4) quarters of 2025–26, we added 2 million customers because of AI. The AI tool analysed call logs, emails, calls, and customer messages. We found that some customers had asked for loans, but the call centre executive either did not understand the accent, failed to follow up, or missed something in an email. We identified customers seeking fresh loans through those interactions. We checked our systems and realised they already had pre-approved loans.
We issued 100,000 additional loans in Q3 and Q4 purely from this data. The AI tool is able to pick up information from a wide variety of internal data sources that the human eye may miss. It is far more efficient because the tool does not need rest. We still have human verification in place. AI can also help assess risk better. It is improving with every new version.
How are you addressing concerns about the risks emerging from AI?
At the last board meetings of Bajaj Finance and Housing Finance, we adopted our first AI governance code. We created it after studying what some of the best companies globally are doing. I think at some point it will become a regulatory requirement.
Because we are early adopters of AI, we voluntarily created a governance code for all employees to follow. We have already engaged with major AI partners. Some have explained the solutions they are developing to combat situations like Mythos.
What is the plan for your insurance ventures, now that you have complete ownership?
Both our companies aim to be among the leaders in their fields. Bajaj General Insurance has had the lowest combined ratio in the sector for the past 20 years. We are among the top three players, and in many lines of business we are No. 2. The difference between No. 1, 2, and 3 is that we are consistently very profitable at No. 3. We balance the top line and bottom line rather than focusing only on growth.
In life insurance, the lower ranking is largely because most policies are sold through banks, and large banks prefer to keep the business within their own insurance companies.
A few years ago, the Insurance Regulatory and Development Authority of India (Irdai) discussed a path to listing with insurance companies, and we all shared our views. For us, it was important last year to buy out Allianz because it wanted to exit.
Over the next two years, Irdai is implementing new accounting standards for insurance companies, which will materially change accounting practices. So we do not think it is appropriate to list now when retail shareholders may suddenly see very different accounts within a year or two.
There is another element as well. Today, the solvency margin is calculated very simply at 150 per cent of the required amount. Globally, the more sophisticated approach is risk-based solvency — if you introduce riskier products, you must hold more capital, similar to the Reserve Bank of India norms for banks.
Irdai is also in the process of introducing that over the next year or two. So we will let these things settle, and then the board will evaluate the next step.
Your businesses are family-owned but professionally run. How do you maintain a distinction between the two?
The roles of the board, the chief executive officer (CEO), and the family all have to be very clear. Our CEOs are fully empowered to run the businesses on a day-to-day basis. The board and family members on the board focus on whether the businesses are headed in the right direction over the medium to long term. That includes lining up long-term strategy with management, building high-quality future leaders, governance, brand integrity, customer focus, and engagement with the government and regulators.
What are your plans for your other businesses — the asset management company, broking, and other verticals?
Our plan is that whether the customer comes through digital or physical channels, Bajaj financial products and solutions should be available seamlessly. That is why we have the broking digital platform, the digital health platform, and the marketplace platform.
These are channels through which new-to-Bajaj customers can enter, even if they do not directly visit the insurance website or the Bajaj Finance app. Last year, we issued more than 110 million loans and insurance policies. We believe we are present in one out of every three middle-class households in India. Our goal over the next five years is to reach every middle-class household in the country.
Do you plan to enter any new areas of business?
We have already announced alternative investments in private equity and real estate. We have set up Bajaj Alts, and we will launch funds later this year.
Have you done succession planning?
We are already in the fourth generation. My brother Rajiv’s children and my children — Siddhant Bajaj and Sanjali Bajaj — are already working in the businesses. They will be groomed within those companies. One of them is at Bajaj Finance, while another is at Bajaj Alts. My brother’s son is at Bajaj Auto.
Our role is to provide the best education and exposure to the next generation. There is no pressure on them to join the businesses. We strongly believe that anyone with capability and a strong work ethic should have a chance at the top job. Fortunately, we have more companies than family members, so succession pressure is lower.
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