India needs some stimulus on the demand side, says Sanjiv Bajaj – ET BFSI


Sanjiv Bajaj, chairman of Bajaj Finance, while commenting on the government Atmanirbhar Bharat package 3.0, told The Economic Times the government’s approach has been to do a balancing act — to ensure that the poor are secure, the farming community, the MSME sector and the stressed get continuous support. “They are also aware that fiscally, they are constrained. Western countries whose currencies are accepted everywhere can keep printing it. We are not like that. As a result, we are seeing a sniper gun type of action being taken. Specific medicines or remedies are being given to specific problems rather than a general overall stimulus. I understand they have their constraints.”

He believes the pro-activeness with which the GoI is coming out with multiple measures will provide reasonable fillip to the economy. However, he feels India needs some stimulus on the demand side to reap the benefits of all the measures announced yet.

Bajaj believes RBI needs to widen its vision on the assessment of candidates for potential banking licences. “Why can’t we have internet-only digital banks that cater to the urban Indian? But, they cannot set up rural branches which they are required to do today. Or, if somebody wants to set up a rural bank, then RBI should incentivise them to do that rather than penalising everybody and forcing them to set up a rural presence which is not profitable for most people. The time has really come to rethink this. Business houses are not allowed to set up banks because there is a worry that they will misuse those funds. But high-quality business houses for 20 years have been running insurance companies and the insurance regulator allows up to 5% of the funds to be used within the group in arms-length transactions,” he told ET. According to him, Bajaj Finance has build a good quality business model and would continue doing the same. In July, they started opening their secured loans to small and medium sized businesses, housing loans and now they have started unsecured loans as well.

“The good thing is all the new loans are behaving on quality the same as customers used to behave pre-Covid-19, so that is a good sign right now. And, that has given us the confidence to push the accelerator on growth. So, you will see growth now happening month-on-month, but…we are a risk company first, so we will continue to track and see how things are on the ground and modify our pace…But right now, it is positive.”

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