Market Sizing and Opportunities in Retail Investment Space

“Submitted towards partial fulfilment of the criteria for award of PGDM by GLIM, Gurgaon”.

Alok Shukla

P181B06

(2018 - 2020)

Prashant Kumar

Regional sales manager Prof. Debasish Sanyal

Bajaj Finance Ltd.

 ACKNOWLEDGEMENT

I would like to express my deepest appreciation to all those who have helped me get this
project to completion.

I am immensely grateful to my guide from Bajaj Finance, Mr. Prashant kumar, Regional Sales
Manager, Fixed Deposits, for extending his relentless guidance and devoting valuable time
towards successful completion of the project.

I am extremely thankful to my internal guide, Dr. Debasish Sanyal, Director, Great Lakes
Institute of management, Gurgaon, for his exquisite support & guidance and his unparalleled
advice throughout the course of internship.

I would also like to thank Great Lakes Institute Of Management for providing me with this
opportunity and extending all the necessary support.

I am immensely thankful to Bajaj Finance Limited and Ms. Madhuri Mohod, Senior Manager,
Campus recruitment and graduate program, Bajaj Finance Limited for providing this eventful
opportunity and making all the required arrangement for the successful accomplishment of the
project

Lastly, I hold in high regard and acknowledge the support of my parents, family members,
colleagues and friends who have helped in every way possible to complete the project.
 CERTIFICATE OF ORIGINALITY

I hereby certify that the work enclosed in this report is my own work. To the best of my
knowledge, it contains no work previously published which has not been cites as a reference. I
also certify that this report is original and has not been written or submitted for achievement
any award or degree.

Alok Shukla

P181BO6

GLIM, Gurgaon
 CERTIFICATE

It is certified that Mr. Alok Shukla, a PG student of Great Lakes Institute of Management,
Gurgaon has undergone Summer Internship at Bajaj Finance Ltd. From 01/04/2019 to
31/05/2019.
His/ her project titled “Market sizing and opportunities in retail investment space” has been
completed to our satisfaction and the present report is a bona fide account of the same.

Signature, Name and designation Signature and Name

and designation of the Industry Guide of the Institute Guide
Date: Date:
 Table of content

Executive summary ….…………………………………………………………………………. 8

Chapter 1

About NBFC………………………………………………………………………………………. 9-10

About company……………………………………………………………………………….. 10-13

Financial…………………………………………………………………………………………… 14-16

Company structure…………………………………………………………………………….. 17

Market Position………………………………………………………………………………….. 18

Important People……………………………………………………………………………….. 19

About Product and Project………………………………………………………………… 20-22

Model of operation…………………………………………………………………………….. 23

Problems / Challenges…………………………………………………………………………. 24

Research Methodology………………………………………………………………………… 25

Analysis of Data…………………………………………………………………………………. 26-29

Chapter 2

Literature review………………………………………………………………………………. 30-31

Chapter 3

Meeting the objectives……………………………………………………………………. 32-33

Chapter 4

Conclusion…………………………………………………………………………………………. 34

Recommendations…………………………………………………………………………….. 35
 List of Charts and graphs

Structure of NBFIs.............................................................................................. 9
Statement of balance sheet................................................................................. 14
Statement of Profit & Loss……………………………………………………. 14
Total Income graph……………………………………………………………. 15
Profitability Comparison……………………………………………………… 15
Ratio Comparison Graphs…………………………………………………….. 16
Company structure…………………………………………………………….. 17
Model of operation of company……………………………………………….. 23
Pie Chart 1……………………………………………………………………… 26
Bar Graph 1…………………………………………………………………….. 27
Pie Chart 2……………………………………………………………………… 28
Pie Chart 3……………………………………………………………………… 28
Bar Graph 2…………………………………………………………………….. 29
 List Of Abbreviations

BFL - Bajaj Finance Limited

FD - Fixed Deposit
PSF - Proprietorship Sales Force
NBFC - Non Banking Financial Company
OD - Over Draft
 Executive Summery

Bajaj Finance is the biggest NBFC of India with over 1 lakh of asset under Management and
CAGR of 35% over the past years. The mainstream business of the company is that of lending
but it also offers some other financial products at the same time. One such product is Fixed
Deposit.
The company wants to thrive on the growing number of retail investors in the country with
increased realisation of money with people over the past few years. FD is a debt instrument and
the money is further used for lending purposes. Bajaj Finance offers attractive interest rates on
its Fixed Deposits, hence has been attracting people in large numbers.
The FD vertical is still in growth stage for the company as the product FD has been launched
very recently by the company. For extending operation, it is very important for a company to
realise the potential of the market. Same stands true for FD. The company is already functional
in Delhi region, but wishes escalate and expand the operations in the area. For doing the same,
company needs to size the market and know its potential.
This is what the project is all about, finding out potential in the retail investment space and
suggesting in favour or against the expansion based of the operations.
Also, I am expected to find loopholes in the sales process and to provide suggestions to curb
those loopholes
India is a growing nation and per capita income of people has been increasing steadily. So the
retail investment has also been growing. But is the growth substantial enough in the Delhi
region to plan expansion?
CHAPTER 1
1.1 About NBFCs
NBFCs offer almost all the services provided by bank, such as credit and loan facilities,
underwriting, retirement planning as well as fixed deposits, the only difference being they do
not have banking license and they cannot open current and savings accounts.

NBFIs

AIFIs NBFCs PDs

Exim NBFC-D NBFC-ND Bank PDs

NABARD SIDBI NHB
Bank

NBFC-ND- OTHER Stanalone

SI NBFC-ND PDs

All India Financial Institutions: - AIFIs provide long term finances some particular sectors
such as agriculture, trade, small industries and housing. As of now there as 4 AIFIs in the
country, namely – NABARD, SIDBI, NHB and Exim bank. AIFIs contribute 23 % towards the
total assets of NBFIs.

Non-Banking Finance companies: - NBFCs offer almost all the services provided by bank,
such as credit and loan facilities, underwriting, retirement planning as well as fixed deposits,
the only difference being they do not have banking license and they cannot open current and
savings accounts.

NBFC-D deposit taking NBFCs whereas NBFC-ND are no-deposit taking NBFCs. As per the
RBI report 2018, there are 10190 registered NBFCs as of now, out of which only 108 are
deposit taking and other 10082 are non-deposit taking. NBFCs contribute as much as 75 %
towards the total assets of NBFIs.
Primary Dealers: - PDs basically work as intermediaries. They have the right to buy
government securities directly from RBI and sell then to buyers. As of now there are 21 PDs in
the country, 14 of which are bank PDs and the other 7 are Non-Bank PDs. Primary dealers
contribute mere 2% of the total assets of NBFIs.
Bajaj Finance falls under NBFC-D category. They are authorised by the Reserve Bank of India
to take deposits without opening current or savings accounts. Basically this is only how Bajaj
Finance differs from banks, apart from all the other facilities, they also open current and
savings account, whereas Bajaj Finance, just like any other NBFC, is not licenced to open
current or savings account, meanwhile providing almost all the other banking products and
services.

1.2 About the Company

Bajaj Finance ltd., A part of Bajaj Holdings & Investment limited, is a financial services
company headquartered in Pune, Maharashtra (India). Bajaj finance focuses on lending, Asset
management, Wealth management and Insurance. It is also a player in the energy sector with
installed capacity of approximately 65 MW of wind-energy production.

The company is one of the major players in the burning consumer finance segment. Besides
consumer finance, they also extend their business to SME, rural and commercial financing.

It is also one of the few NBFSs in the country which also accepts fixed deposits.

It has 33000+ distribution points and has presence over 750 + different locations across the
country.

The company differentiates itself on the basis of ease of availing finance, minimal amount of
paperwork required, fully digital method of approval and fast & efficient service.

Bajaj Finance ltd. Is listed on both BSE and NSE with a current share price ranging between
2780-2800 and a market cap of 161258.96 Crores.
1.2.1 Verticals

Finance

Insurance

Investment

Finance: - Finance is basically the vertical which deals with the ‘loan’ part of the company
under which the company provides different kinds of loans which includes:

1. Personal loans
2. Home loan
3. Auto loan
4. Business loan
5. Lease Rent Discounting
6. Loan against property
7. Loan against shares
8. Gold loans

Investment: - Unlike most of the other NBFCs , Bajaj Finance also accepts fixed deposits and
offers an interest rate which is generally higher than majority of the other FD institutes such as
banks. So under the investment vertical, two distinct products are covered:

1. Fixed Deposits
2. Mutual Funds

Insurance: - This vertical covers the different kinds of insurance schemes being offered by
the company, such as:

1. Health Insurance
2. Life Insurance
 3. Motor Insurance
4. Home Insurance
5. Pocket Insurance

1.3 PRODUCTS

Following are the different products being offered by Bajaj Finance ltd:-

Loans:

 Flexi Personal Loans: These are relatively new concept of borrowing funds launched by
Bajaj finance in India. Under this scheme, consumers can borrow according to their need
and set a limit and prepay. Customers only need to pay interest or the loan amount which
is being put in use.
 Personal Loan: Personal loans are basically unsecured loans needed for meeting current
financial needs. The company offers unsecured loans up to 25 lakhs in 24 hours without
any pledge collateral with Flexi EMI option and loan repayment tenure ranging from 12
to 60 months.
 Home Loan:- Bajaj Finance provides home loans of up to 3.5 cr. and claims to have
lowest interest rate in the country against home loans when compared to other lending
bodies. Besides this, they also offer the option of transferring any existing home loan to
them at with a promise of providing lowest interest rates.
 2&3 Wheeler Loan: The Auto Finance division, Bajaj Auto Finance, has been in
operations since 1987 and has served more than 30 lakh customers across India. They
offer their customers vehicle loans for the purchase of their favourite Bajaj Motorcycles.
 Business Loan: -Quick Unsecured business credits up-to 30 lakhs to help SME business
tasks, putting resources into foundation and increment in Working Capital to help them
in running their activities easily and furthermore to help them in growing in business.
Likewise, they give redid business advances like Working Capital advances, Machinery
Loans, SME credits, Business Loans for women.
 Lease Rent Discounting: A minimum loan of 10cr.can be availed on leased out property
based on the discounted cash flows of estimated future rents for the propert.
 Loan Against Property: This plan empowers you to exploit your home in dealing with
your money requirements for kid training, marriage costs, growing your business or
notwithstanding supporting your hospital expenses by taking advance measure of up-to
1 cr. for salaried people and 3.5 cr. for independently employed people by swearing your
property against it. Tenor territory from 2 to 20 years and you can have enormous credit
sum at entirely reasonable rates.
  Loan against Shares: Consumers can get a loan of up to 10 cr. against their securities,
mutual funds, bonds, stocks and shares without any pre-closure charges.
 Gold Loan: Consumers can get loan up-to 10 lakhs against gold they own.
Investments:

 Fixed Deposits: You can put your well-deserved reserve funds in most secure venture
alternative that is Fixed Deposit with guaranteed returns and an adaptable tenor going
from a year to 60 months and furthermore Tax sparing F.D. Bajaj money gives the most
elevated loan cost of 9.10% and extra 0.35% for senior resident appraised FAAA by
CRISIL that is of most elevated rating for any stores. You can keep up your record on
the web.
 Mutual Funds: Bajaj Finance provides 2000+ schemes of large cap, multi cap and small
cap funds.

Value Added Services:

 Extended Warranty : Extension of producer's guarantee on your Consumer Durable

buy, taking care of the expense of fix/substitution if there should be an occurrence of any
sudden harm inside a stipulated time
 Asset Care : Asset care can be bought within 6 months of the purchase of consumer
durables irrespective of the product being or not being financed by Bajaj Finance
Finance for professionals:

 Engineer loan
 Chartered Accountant loan
 Doctor loan
Insurance:

 Health Insurance
 Life insurance
 Pocket insurance
 Motor insurance
 Home insurance

 EMI Store: Bajaj Finance is now providing 0% EMI facility on large range of
consumer products such as electronics and apparels.
 1.4 FINANCIALS

Balance Sheet

Amount in Cr.
Consolidated Balance Sheet Year Year Year Year
March 18 March 17 March 16 March 15
Total Shareholders’ Funds 16545.7 9600.26 7426.76 4799.71
Total Non-Current Liabilities 47532.86 34686.45 25977.2 18561.36
Total Current Liabilities 22745.83 19443.8 13052.64 9450.26
Total Liabilities 70278.7 54130.3 39029.8 28011.6
Total Capital And Liabilities 86824.34 63730.51 46456.6 32811.33
Total Non-Current Assets 49043.72 33585.43 25905.85 18821.7
Total Current Assets 37780.62 30145.08 20550.75 13989.63
Total Assets 86824.3 63730.5 46456.6 32811.3

Consolidated Profit and Loss statement:-

Bajaj Finance
Consolidated Profit & Loss account Amount in Cr.
March 18 March 17 March 16 March 15
Total Income (Revenue) 13,465.91 9,992.19 7,383.66 5,418.28
Expenditure
Raw Materials 0 0 0 0
Power & Fuel Cost 0 0 0 0
Employee Cost 1,419.59 931.67 629.63 450.73
Other Manufacturing Expenses 0 0 0 0
Selling and Admin Expenses 164.74 67.93 75.33 0
Miscellaneous Expenses 3,048.98 2,300.30 1,730.83 1,326.73
Preoperative Exp Capitalised 0 0 0 0
Total Expenses 4,633.31 3,299.90 2,435.79 1,777.46
Operating Profit 8,808.73 6,666.81 4,868.52 3,604.34
EBITDA 8,832.60 6,692.29 4,947.87 3,640.82
Depreciation 102.07 71.17 56.34 35.6
EBIT 8,730.53 6,621.12 4,891.53 3,605.22
Interest 4,634.33 3,803.71 2,926.85 2,248.27
PBT 4,096.20 2,817.41 1,964.68 1,356.95
Tax 1,422.09 981.03 686.05 459.07
Profit After Tax (Net Profit) 2,674.11 1,836.38 1,278.63 897.88
1.4.1 Graphical Highlights of financials: -
Total Income/ Revenue

Total Income
16000
13465.91
14000
12000 9992.19
10000
7383.66
8000
5418.28
6000
4000
2000
0
Mar '15 Mar '16 Mar '17 Mar '18

CAGR 35%

Year wise profitability comparison

Profitability comparison year wise

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Mar '15 Mar '16 Mar '17 Mar '18

EBITDA margin PBT margin PAT margin

 Ratio Comparisons: -

Ratios Mar '15 Mar '16 Mar '17 Mar '18

ROE 18.7% 17.2% 19.1% 16.2%
ROCE 15.4% 14.6% 15.0% 13.6%
ROA 2.7% 2.8% 2.9% 3.1%

ROE IS A MEASURE OF FINANCIAL 20.0% ROE

PERFORMANCE 18.0%

CALCULATION – NET INCOME / EQUITY 16.0%

14.0%
TELLS HOW EFFECTIVELY THE ASSETS ARE Mar '15 Mar '16 Mar '17 Mar '18

BEING USED TO GENERATE PROFIT

ROCE
ROCE IS A PROFITABILITY RATIO 0.2
0.15
CALCULATION – EBIT /CAPITAL EMPLOYED 0.1
0.05
ROCE IS RELATIVELY LOWER IN 2018 AS A 0
RESULT OF HUGE INVESTMENTS MADE IN Mar '15 Mar '16 Mar '17 Mar '18

THE PRECEDING YEAR

Return on capital employed

ROA
3.20%
3.10%
3.00%
2.90%
2.80%
2.70%
2.60%
2.50%
Mar '15 Mar '16 Mar '17 Mar '18

Return on Asset
1.5 COMPANY STRUCTURE

Following is the structure of company which present the parent company and different
subsidiaries:-

So, as we can see here, Bajaj Finserv is the parent/holding company of Bajaj finance ltd. And in
particular, Bajaj Finance is that unit which deals with lending and financing services of the
parent/holding company.
1.6 Market Position
NBFC Industry overview:

So, there is a PWC report in tie up with ASSOCHAM on NBFC industry in India published in 2018
which states that

1. Indian lending market: an underpenetrated opportunity- The Indian economy has been
on a positive trajectory in the amount of formal credit deployed, supplemented by rising
consumer disposable income and ease of access to credit. Credit off-take has grown by
11% over the last 10 years1, led by public and private sector banks. However, despite
overall credit growth, India still remains under-penetrated in retail and MSME lending,
with household credit to GDP2 ratio lagging several major emerging and developed
economies. The opportunity has driven several non-banks to enter the retail lending
space, through the use of innovative lending models and product innovation.

Source: https://www.pwc.in/assets/pdfs/publications/2018/building-the-nbfc-of-the-future.pdf

In India NBFC is a very fragmented market. As on FY2017 there are 11522

2. Bajaj Finance, in particular is the leading NBFC of the country with over 90000 crores
of AUM and around 35% of compound annual growth rate in the past 5 years.

Bajaj Finance Fact sheet:

 Bajaj Finance is a 31-year-old Non-bank finance company spread its portfolio of services
across Consumer finance , Payments, Rural, SME, Commercial & Mortgages financing.
 Its Credit rating is AAA/stable by CRISIL, India Ratings, CARE Ratings and ICRA.
 Bajaj Finance’s credit rating for Short Term Debt Program is A1+ by CRISIL, ICRA & India
Ratings.
 It has 867 urban locations and 869 rural locations with over 84,700+ distribution points Large
customer franchise of 32.57 MM.
 It was able to have 6.77 MM new loans booked in Q3 FY19
 People:-

Rahul Bajaj : Chairman - Being an economics graduate from Delhi University, and holding a law
degree from University of Mumbai, he is often considered as one of the most successful business leaders
of the country.

Name Designation Education Background

Nanoo Pamnani Vice chairman and Holds bachelor’s degree in Arts from university of
independent director Mumbai and bachelor’s degree of economics from
London school of economics.

Sanjiv Bajaj Vice Chairman A mechanical engineer from university and an

MBA from Harvard Business School ,U.S.A

Rajeev Jain Managing Director A management graduate from T A Pai

Management institute with more than 22 years of
industry experience

Madhur Bajaj Director Commerce graduate from Sydenham and an MBA

IIMD, Switzerland. Also serves as the president of
SIAM and Mahratta chamber of commerce

Rajiv Bajaj Director A mechanical engineer from University of Pune

D.S Mehta Independent Director Having more than 50 years of industry experience,
and a part of Bajaj since 1966, Holds a bachelor’s
degree in commerce from Sydenham and is a
fellow of ICSI

D.J Balaji Rao Independent Director With more than 52 years of experience in
industrial engineering, Banking and finance, is a
mechanical engineering

Omkar Goswami Independent Director M.A in economics from DSE and a doctorate in
philosophy from Oxford University. He has more
than 27 years of experience in corporate

Dipak Poddar Independent Director A science graduate from MIT( Massachusetts

Institute of Technology), USA
1.7 About the Project
The objective of the project is to analyse the behaviour and pattern of people while investing in
fixed income securities. The company wants to further expand its operations in Delhi NCR
region and requires me to size the market of fixed income securities as well as suggest whether
or not they should expand based on the potential of the market.

The project is about assessing current market situation of retail investments in India and
finding out the potential of the retail investment market. I have been given Fixed Deposit
vertical, as Bajaj Finserv also takes deposits. The underlying agenda behind this project is
finding out where Bajaj stands in terms of market share and reach when it comes particularly to
retail investments. Towards the closure, I have to come up with a comprehensive report
containing the total market size of retail investments and dimensions & opportunities of growth
when it comes to retail investments.

1.8 Vertical / Department

I have been given the fixed deposit vertical, which takes care of deposit taking activities for the
company for which is further extended as loan to the customers. Amongst NBFCs, Bajaj
Finance is the biggest NBFC basis the total amount taken as deposits as well as the total
amount disbursed as loans. The company offers lucrative interest rates to attract investors. As
of 2018, company had a total of 4600 crore of fixed deposits, witnessing a growth of more than
30 percent as compared to the previous year.

1.8.1 Investment scenario of fixed deposit in India

Fixed deposits are investment instruments used by banks and NBFCs to raise funds. FDs
involve a maturity period and generally offer higher interest rates than savings account.
Traditionally, Banks have been the preferred destination for majority for investing in FDs, but
with advent of NBFCs in relatively recent past, sentiments of people has been shifting and
huge FD investments are being made in NBFCs. The reason for this shift goes to higher interest
rates being offered by NBFCs and multiple pay-out schemes.

As of march 2018, total deposits in banks stood at 117 lakh crores, registering a growth of 6.92
% from the previous year. Of the total deposits, share of fixed deposit / term deposits stood at
58.2 %. The growth of 6.92 % was recorded as five decade lowest growth rate. Does it entirely
mean that people have started investing less? No. Partly, the reason for decline in investment in
fixed deposits in banks can be attributed to demonetization effect. And the other reason is
change in sentiment of investors. Where banks have seen a five decade low growth of 6.92% in
fixed deposits, NBFCs like Bajaj has seen a humongous growth of more than 30 % in deposits,
Reason for this could be increased awareness and trust towards NBFCs and relatively higher
interest rates offered on Fixed Deposits than banks.
1.9 Scope of project
It all starts with sizing the market, yes it does. You need to aware of the potential of the market
before you can shape your strategy. Also you need to well aware of the product offerings
currently available in the market as well as your competitors. The amount required to be
invested in order to be successful should be justified by the potential returns. This is where the
scope of project lies, the company needs me to map the market as they are planning to expand
in the Delhi NCR region and looking to introduce a new facility in north Delhi.

Major revenue of Bajaj comes from their lending business. But for lending money to people,
they themselves need funds available with them to be able to lend. As we might be aware of the
fact that widely, there are two ways for raising funds, through debt and through equity. For a
company, raising money through fixed deposits is debt instrument as it is a liability for a
company. The company offer a rate, varying between 8 % - 8.85 % per annum on fixed
deposits, while cost of debt of other debt instruments comes out to be at least 10 percent.

Delhi NCR is region with a lot of retail investors, who invest in fixed income securities, hence,
the region presents tremendous opportunity for a company like Bajaj Finance. Mapping out the
market of retail investment shall help the company to plan its expansion in the region.

1.9.1 Expected outcome from the project:-

 Tracing and approximating the number of retail investors
 Potential of the market
 Paying capacity of retail investors in the region
 Analysing direct competitors and their product policies
 Identifying the target customers
 Assessing whether or not the current product falls in line with the requirement of
targeted investors
 Identifying loopholes, if any in the sales process
 Recommending suggestions to curb those loopholes and escalating sales
 Finding out the preferred investment destination of people
 Addressing the awareness of people about Bajaj
 1.10 Fixed Deposits at Bajaj

Bajaj Finance, the leading NBFC, is also a market leader when it comes to taking deposits. Amongst all
the NBFCs, Bajaj finance has taken the highest amount as retail deposits, which stands out to be
staggering 5000 cr. as of the first financial quarter of the year 2019 whereas its nearest competitor,
Mahindra Finance could only manage half of its arch rival. The company could achieve such milestone
riding on the back of brand legacy that Bajaj Finserv has created for itself, its aggressive sales
approach, customer convenience and above all, hiked interest rates being offered to the customers on
fixed deposits.

Following are the rates offered by Bajaj Finance on fixed deposits :-

Fixed Deposit Interest Rates 2019

Non-Cumulative
Tenor in Months Minimum deposit (in Rs.) Cumulative
Monthly Quarterly Half Yearly Annual

12 – 23 8.00% 7.72% 7.77% 7.85% 8.00%

24 – 35 25,000 8.15% 7.88% 7.93% 8.00% 8.15%

36 – 60 8.60% 8.28% 8.34% 8.42% 8.60%

Whereas, the company offers an added 0.35% extra to senior citizens i.e a lucrative rate of up to 8.95
% per annum on Fixed Deposits.

Tenor in Months Minimum deposit (in Rs.) Cumulative

12 – 23 8.35%

24 – 35 25,000 8.50%

36 – 60 8.95%
1.11 Model of Operations of the company
Starting with understanding organizational structure of Sales Team through which
communication flows and decisions are taken in order.

Managing
Director

Business
Head

NSM

ZSM ZSM ZSM

RSM RSM

ASM/SM ASM/SM ASM/SM ASM/SM

Team of PSF Team of PSF Team of PSF Team of PSF

PSF: Proprietary Sales Force are the level one/ ground level employees of the organisation but
they,in a sense hold the most importance. PSFs are the face of company to the customers and
are responsible for bringing in the business. PSFs are employed on the basis of third party
payroll.

NSM National Sales Manager

ZSM Zonal Sales Manager

RSM Regional Sales Manager

ASM Area Sales Manager

SM Sales Manger
1.12 Problems/ challenges faced by the company (in selling fixed deposits)
Despite the legacy, the brand and staggering growth, I feel there is potential for more, there
always is. Following this, I will highlight some problems face by the company, rectifying
which could improve their sales:

 Less awareness among people towards Bajaj as a brand that takes fixed deposits.
Majority of people think of Bajaj Finance as a brand whose entire operation is that of
lending/credit/loan.
 Lack of trust in NBFCs. Even those who are aware, many of them are reluctant in
investing their money in company deposits and NBFCs for the fear of instances of
frauds, like that of Sahara group. All of this is ground level reality which I have come
across while surveying people.
 Insufficient training and development among level 1 employees (PSF), as they are
asked to sell from the very second day of their joining. Some come with a little
experience of the domain, while others are clueless about the product. What this does to
the company is, when people without training go out for activities and cold calling, they
eventually end up deteriorating the image of the company and instead of creating
awareness and trust, the company loses a potential customer.
 Lack of a structured marketing drive, as the entire focus is solely on selling. Despite
registering unmatched growth over the past decade, the company is still reluctant on
spending big on marketing, digital marketing in particular. You could barely see a Bajaj
fixed deposit commercial on television or a promotional banner hanging around the
roadside. This is how you create awareness, this is how you pull customers. The
company is currently pushing its products to the customers, but the moment they start
pulling them, this is where game changes and growth multiplies.
 Customer service is a point which can be improved by quite a degree. Although there is
ample convenience to the customers, as PSF would go to the customers place, solve
queries, collect documents etc. But the real problems starts when the FD is picked. It
takes around 15 days for the receipt to reach the customer by post. What customer has
by then is just an acknowledgement mail, nothing else. They keep calling and asking
for receipt and eventually the executives start turning down the calls, as they
themselves have no say in the matter since the receipts are posted directly from the
Pune corporate office. Today the company has around 55-60 % renewal rate which
could easily be increased to 65-70 % if the said problem is rectified.
Research Methodology

 Type of Data - Qualitative & Quantitative

 Mode of collection - Primary & Secondary

- Questionnaire

- Experience

- Internet

- Books & Journals

 Sample size - 36

 Universe - General Public (potential customers)

 Sampling Method used - Simple random sampling

 To size the market and find out its potential, a survey has been conducted.

 The survey was conducted among 35 people, on random basis, seeking information
about their age, salary, investment pattern and size of investment.
 Apart from a structured questionnaire survey, an unstructured survey was also
conducted with an intention of assessing the sentiment of people towards NBFCs (Bajaj
Finance in particular), especially when it comes to making investment in such NBFCs.
 Further data has also been collected from existing customers seeking their experience
with Bajaj Finance.
Analysis of Data

 36 people were surveyed in order to find the potential of the market in retail investment
space.
 Following is the analysis of research as per the different tested parameters :-

1. People who invest in fixed income securities

Among the 36 respondents that were surveyed, almost 69% of the respondents had made
investment in fixed deposits. 69% poses a huge potential for a company to expand its
operations.

As per the SEBI investment report, 95% of Indians prefer Bank Deposits. The buffer in both
the surveys in due to the fact that SEBI considered entire population (urban and rural), whereas
this study was particular to Delhi, where people are more aware of different investment
avenues as well as they are ready to take more risk.

So, according to me, there is huge potential in Delhi region for the company to expand its
operations of taking public deposits. Considering FDs as a safe investment, people prefer
parking their money in FDs rather than other riskier investment options.

Do you invest in fixed deposits ?

No, 31%

Yes, 69%

Yes No
2. Preferred Investment option

While 70 % invest in fixed deposits, 50% of the population prefers FD over any other
investment avenue, considering equity/stock, Mutual Funds and Insurance as other options.

Fixed Deposit - 50 %

Mutual Fund - 33.3 %

Equity/Stock - 33.3 %

Insurance - 19.4 %

Others - 16.7 % (Includes those who prefer other investments or do not make investments)

3. Preferred parameters while investing in Fixed Deposits

Customers were asked to rate different parameters basis their order of preference while making
investments. Following are the responses:-

Out of 25 respondents who invest in fixed income securities, 11 (i/e 44%) mark rate of return as the
most preferred parameter while making investment, while Trust in Brand, Customer service, Payout
option and Brand Legacy get 8, 3, 2 and 1 vote respectively for most prefereed parameter.

People gave least preference to payout options available while making investments as 14 out of 25
respondents rated ‘payout option’ as the least preferred parameter taken into consideration while
investing.

Preferred Parameters
16
14
12
10
8
6
4
2
0
1 2 3 4 5

Series1 Series2 Series3 Series4 Series5

4. Awareness about Bajaj Finserv / Bajaj Finance

Bajaj Finance scores big on this parameter as more than 90 % of the respondents were aware of
Bajaj Finance as a brand.

Are you aware of Baja Finance?

No
8%

Yes
92%
Yes No

5. Are investors aware of the fact that Bajaj Finance also takes deposits?

As much it might be a shocking news for the company, only 40 % of the people who invest in
fixed income securities, are aware of the fact that Bajaj Finance takes deposits as well, despite
offering a rate which is way better than many other deposit rates available with people. This
number talks only about people who invest in Fixed Deposits, which indicates that if not all,
majority of them might do proper R&D before investing. In that case 40 % awareness in Delhi
region must be a troublesome figure for the company.

Do you know that Bajaj Finance takes Deposits?

Yes , 40%

No, 60%

Yes No
6. Preferred Destination of people while investing in Fixed Income securities

As per the study, people prefer Government Banks while parking their money as deposits, as
40% respondents prefer Government Bank fixed deposits against 24%, 20% and 16% in
Private Banks, NBFCs and Post Office respectively. Preference to banks over NBFCs could
also be due to the fact that banks have CASA (current and savings account) while NBFCs are
not permitted to open accounts, so it becomes easier for people to invest in the same bank
where they have running account.

Preferred Destination

10
9
8
7
6
5
4
3
2
1
0
Government banks NBFCs Private Banks Post Office

Analysis of Unstructured Data

Unstructured data was collected through random conversation with existing customers as well
as potential customers. Agenda was to figure out if people trusted NBFCs when it came to
investing their money and if the existing customers were satisfied with the kind of service
provided by Bajaj Finance. It turns out that people still don’t trust NBFCs a much as they trust
banks, owing to some harsh experiences with the likes of Sahara Group. Also, majority of
existing customers are happy with the kind of service provided by BFL but some of them do
have issues with late disbursal of receipt. Deposit receipt takes around 15-20 days to reach
customer leaving them restless for the period.
CHAPTER 2 : LITERATURE REVIEW

A STUDY OF FACTORS INFLUENCING SWITCHING BEHAVIOUR OF FIXED

DEPOSIT INVESTORS OF INDIAN BANKS

BY

Ms Tanvi Singhal

The paper talks about how retail investments form a foundation to the financial sector, in turn
derives path for economic growth of the nation. Further it also describes the factors influencing
the switching behaviour of customers from one financial product to the other and one
institution to other.

Fixed Deposits

Fixed deposits are basically financial products/ instruments offered by banks to customer,
offering interests on deposits. Fixed Deposits are done for a particular time period and this is
the reason they are also referred as Term Deposits. FDs are considered to be one of the safest
mode of investments, hence the most preferred one too. Referring to RBI data, as of 2018, total
amount of fixed deposits in banks stood at 117 lakh crores, registering a growth of 6.92 % from
the previous year.

Switching behaviour of customers in Fixed Deposits

The research focuses on analysing the switching behaviour of customer in fixed deposits and
factors on which switching behaviour depends. Sample size for the study in 392, all of whom
have invested in fixed deposits.

Findings of the study suggest that switching behaviour of the customers depends on a number
of factors including other investment avenues, more attractive FD rates in other financial
institutions, Age, Education and Income.

The study reveals that, applying the chi-square test, it becomes evident that the switching
depends mostly on attractive returns in other investments. But it also depends on factors like
rate of interest offered by other banks and NBFCs as well as the age, education and income.
 CONPARATIVE STUDY ON MUTUAL FUNDS AND FIXED DEPOSITS

BY

H.M. Jyothi

This study focuses on understanding Mutual funds and fixed deposits as well as comparing
fixed deposits with mutual funds. It says that inflation adjustment is one most important thing
to consider while investing your money. Since the FD rates are fixed , they do not come up
with inflation adjusted returns, say for example in financial year 2011-2012, the inflation rate
was at around 7% , while interest rates on fixed deposits was also 7% and less for majority of
the banks. In such scenarios you end up even losing your money. On the other hand, looking at
the records, majority of the mutual funds give returns greater 10% (some even give as high as
15-20 %), thereby giving you inflation adjusted and good returns. But mutual funds do not
come without risk, where the investors have the chance of even losing their money (chances
are low though).

Findings from the study suggest that Mutual funds are better investment destination as
compared to fixed deposits basis their inflation adjusted and higher returns. One place where
Mutual Funds lag behind Fixed Deposits is fixed deposits are risk free whereas mutual funds
have their share of risk.

The paper also records reviews from a literature by K. Chandrakumaran. The study was
directed towards examining the investment choices of salaried class in a particular area. With
the help of 100 responses gathered, it was suggested that as per the income level of employees,
their investment avenue differs.
CHAPTER 3 : MEETING THE OBJECTIVES / EXPECTED OUTCOME

This Chapter talks about how the study conducted was able to meet the expected outcomes of
the project and how well the related objectives were achieved.

3.1 Retail investors in Delhi NCR and Potential in retail investment space

As per the survey conducted, around 90 % of the people in Delhi do make retail investments.
So the market of retail investments has a huge potential and has been ever growing with
increased realisation of money with people. Company should well expand its vertical of Fixed
Deposits, and any investment made in the direction of expansion would be a healthy step
forward.

3.2 Paying capacity of people

Delhi has people from different income groups. When asked about how much would they like
to invest given an attractive return, 8% said they were ready to invest more than 10 lakhs while
20% could only invest in the range of 0 – 1 lakh.

0 – 1 Lakh - 20%

1 – 2 Lakh - 28%

2 – 5 Lakh - 28%

5 – 10 Lakh - 16%

More than 10 Lakh - 8%

3.3 Identifying Target customers

Each and every person could be a potential customer for fixed deposit. But, a minimal focus
should be laid on people below the age of 20 as they are least likely to be earners, hence have
bleak chances of being investors. Extensive focus should be laid on retired professionals as
they are more likely to invest their lifetime savings in safe investment options as Fixed
Deposits. Also, since Bajaj Finance offers better interest rates than the majority, HNIs should
also be targeted. Since HNIs invest big, even a slightly hiked rate would ensure a substantial
realisation of premium return.
3.4 Does the product fall in line with requirement of people

There is no doubt in saying that FD has been the most famous instrument among investors. Be
it for its secure returns or the ability to beat the inflation through its returns or for the fact the
market condition have a minimal impact on returns, Deposits have been the most faithful and
famous instrument available with people.

But the time is changing and the world is evolving. Even a simple product like FD needs some
innovation. In the recent past banks started offering loans and started cross selling other
financial products with fixed deposits to make it more attractive and lucrative but it still needs
something more for NBFCs to come at par with the likes of banks.

3.5 Loopholes in sales process

This is an area where the company can improve big time. Although sales process is rigorous,
and the selling is aggressive, the newly assigned PSFs are not given enough training and are
straight away asked to go out and sell. If the face of company carries inadequate knowledge,
this might create an unwelcoming image for the company. PSFs do learn eventually, but it
takes time and comes with practical experience. The learning process could be enhanced and
productivity could be increased through a proper training given at the beginning of joining.

Apart from this, one more loophole in the sales process is that many a times the same lead is
circulated among many sales executive from time to time, and in that case, the target client
receives calls from different executives, which often tends to make the client angry and
disinterested.

3.6 Addressing awareness

The study suggests that more than 90 percent of people are aware about Bajaj Finance but only
40% are aware that Bajaj Finance takes public deposits and offers attractive rates. To address
the awareness of FD vertical of Bajaj Finance I have conducted few corporate activities with a
team of 4-5 people. The agenda was to make people aware of the FD vertical of BFL and let
them know about the rates being offered.
CHAPTER 4: RECOMMENDATIONS AND CONCLUSION

4.1 Conclusion

Bajaj as a brand has legacy of its own and this has been reflected in the phenomenal growth
that they have shown is recent years. Speaking of BFL, A CAGR of 35% over the past 5 years
speaks the story its success. Aggressive selling and effective leadership is making it all happen
for BFL.

 More than 90% of adults do make retail investments. Hence it is a great opportunity for
the company to attract retail investors in form of company deposits.
 Being particular, around the people who invest, 70% invest in fixed deposits.
 This concludes that there is a huge potential in the retail investment space and it is
advised for the company to escalate its operations in Delhi region.
 Bajaj Finance as brand has huge awareness among people but the FD vertical lacks
enough buzz, and this is an area where Bajaj Finance needs to work strogly.
 People prefer rate of return over any other parameter while investing in fixed income
securities while they also give enough preference to trust and customer convenience.
Availability of pay-out options is the least preferred parameter.
 People do have trust issues with NBFCs. Also, people still prefer physical contact and
branch walk-in when they chose to invest in deposits. But the sentiment is moving and
brands like BFL are attracting retail investors.
4.2 Recommendations

Although, the company is doing fantastic on strategic front as well as have good products on
offer, there are a few suggestions which I would like to make in order to further enhance the
performance of the FD vertical.

 First and foremost, a good marketing strategy is extremely needed. The company needs
to spread awareness among people regarding the fact that they also take deposits. As
per the study conducted, only 40% of the investors know about the FD vertical of
BFL(Bajaj Finance Ltd.). This could be done through digit media as well as through
different promotional activities like corporate visits. They need to communicate their
product (FD) as well the attractive rates that they offer.
 Secondly, FD is something that gets renewed majority of the times by investors. Bajaj
has around 55% renewal rate. This could well be increased to 65-70% by a simple step
of sending an e-receipt to the customer as soon as his/her FD is logged in. In the current
scenario, it takes 15-20 days for a physical receipt to reach the customer. I have
witnessed customers getting panicked and showing their determination to have no
further relation with Bajaj Finance. One e-receipt at the time of FD log-in would mean
10-15% more retention rate.
 New recruits need to be trained. New recruits, especially the PSFs are not given
adequate training at the time of joining. Some of them don’t even know the product
entirely before they start working. They learn eventually with time, but the performance
they start delivering after 2-3 months, they could well start delivering the same in 10-15
days with proper training.
 Proper structure is need do distribute the leads among sales executives. Same lead gets
circulated among 2-3 executives, creating chaos and diminishing customer delight.
 Lastly, the company offers loan of up to 75 % against FD. I would suggest them to offer
OD limit instead of loan, as OD is highly in demand and a few other institutes has
started offering OD against FD. So, to stay relevant and stay in the competition, they
should also also offer OD against