Bajaj Finserv to float home finance firm as banking plans fail

The Sanjiv Bajaj-led Bajaj Finserv, the financial arm of the Bajaj Group, is set to float a home finance company (HFC) after plans to convert into a bank did not get Reserve Bank of India approval.

The company has said that it will apply to the National Housing Bank for a licence to set up an HFC. It envisages a capital requirement of Rs200-300 crore in the initial two-three years. Bajaj Finserv is the holding company for the group's financial service business, which includes lending and insurance.

"We are already extending home loans but this is under our finance company. We had not floated an HFC earlier as we wanted to first build the capabilities and the benefits of a separate entity was not felt as the size of the book was small," Sanjiv Bajaj, managing director of Bajaj Finserv, said in Mumbai.

The company has a home loan book of around Rs14,000-15,000 crore, which includes loan against property. At present, the bank is focusing on three segments - loan against mortgage of house for businesses, home loans for the self-employed and home loans for the salaried.

"The advantages include additional avenues of borrowings, lower risk weights for certain class of loan, and easier legal repossession, amid others," said Rajeev Jain, chief executive officer, Bajaj Finance - the lending arm of the group.