Making Size Count

Fortified by sound asset-liability management and a rapidly expanding diversified portfolio, Rajeev Jain is now pushing for leadership in all segments Bajaj Finance lends to

- Salil Panchal

Rajeev Jain sits beside a table and hurriedly flips through the pages of a booklet which has the Q2FY19 investor presentation of Bajaj Finance. He pauses at a page that provides the asset-liability management (ALM) snapshot for the company.

“We had been showing ALM data for the past five years. Two years ago, nobody paid much attention to it, so we pushed it back as annexure in our presentations. Now when investors ask for it, I tell myself, ‘Thank God, I did not treat ALM as an annexure to my business model’,” says Jain, 47, who was the CEO of Bajaj Finance for seven years till 2015 and is now the managing director.

“Liquidity risk is one of the most important dimensions of running a lending business. Now investors are waking up… in most buckets, my liquidity gap is positive,” Jain tells Forbes India.

Bajaj Finance’s book, as on September 30, 2018, reveals a positive ALM gap of 7,202 crore (113 percent) for a month-long cycle. It means the company expects inflows from its assets over that period to be higher than the outflows from its liabilities. Similarly, it is likely to maintain a positive ALM gap across different future maturity time periods, such as 1-2 months, 2-3 months, 3-6 months and up to 12 months.

Effective ALM is key in managing cash flows, whereby a company knows when liabilities have to be paid for. Besides liquidity, in a regime with rising interest rates, prudent ALM practices become that much more important.

Jain’s reason to talk extensively and passionately about Bajaj Finance’s positive ALM gap is justified. After all, it is this factor and a strong focus on innovation and profitability that make it a crown jewel in the financial services conglomerate, which is headed by Rahul Bajaj’s younger son Sanjiv. Sanjiv’s elder brother Rajiv leads Bajaj Auto.