Daybreak - "Hello, I’m calling from Bajaj Finance. Do you want a loan?"

Episode Date: April 12, 2024

Phone calls from Bajaj Finance offering loans are almost inescapable and lately, the non-bank has faced quite a backlash for it. But telecalling has been an enduring sales channel for the company which boasts of a loan book worth $28 billion. And despite the massive size of its loan book, it’s been growing at 30% for years. Now this rate is seeing a dip through.Bajaj needs to maintain a 26-27% growth rate. Meanwhile, shifting its loan sourcing to its digital assets is going to take a while.So those pesky calls are unlikely to stop anytime soon.In this episode, we take a closer look at this Bajaj Finance’s annoying but successful system of tele-calling.**This is a repeat episode since April 11 was a public holiday

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcast, you've probably heard me. My interruptions, my analogies and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios,

laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first studio. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. You know, there is a meme online and it is a poll with a question who calls you daily.

The options are A, partner, B, parents, see friends, and D, Vajalj finance. Which one do you think has the most words? Take a wire guess. But for real, their calls are inescapable, and that is because they are relentless. And that partially explains why the company boasts of a loan book worth $28 billion. You see, Bajaj finance is a baby of the call center era. What makes it stand out is how it has been still using tele-selling successfully, despite the advent of so many innovative ways of digital.

marketing. A senior executive at a prominent non-banking financial company told Arundati Ramanathan, the deputy editor, the Ken, and I'm quoting, no one does call centers the way Bajaj does. It runs them at an industrial level. End quote. But as true as that statement is, there is no denying the fact how irritating these calls are. And if you think the company does not realize this, well, you are quite wrong. They are fully aware of it. They even updated their governance mechanism in 2022 to ensure that no customers receive more than two calls a month. I'll tell you more about it later in the episode. But here is what is interesting about Bajaj finance. More than half of the loans that it gives are to the existing base of customers alone. Usually for any other non-bank, this is

much lesser. Now, despite the massive size of its loan book, surprising Interestingly, Bajajan finance has been growing at a phenomenal rate of 30%. And that has been the case for years. But now Bajaj finance has become a prisoner of its own growth rate. It has to maintain that level anyhow. But its pesky calls are also facing quite the backlash these days. So what is Bajajan finance going to do? Like Arundati says, it looks like there is no way of escaping these calls from Bajajan

finance in the new future. So today, let us look at this very well-oiled machinery that is at the core of the company's telecalling system. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Snigdaa Sharma, and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Just like other lenders, Bajajan finance has many ways to acquire borrowers. It uses its 4,000 plus branches and 150,000 point-of-sale networks.

It employs field agents, sends emails, SMSes and contacts digitally through its website and app. But the one sales channel that has managed to maintain its relevance through the decades is its team of nearly 5,000 outsourced call center agents. Bajajan finance has over 50 products, from loans dedicated to doctors to loans for getting a hair transplant and everything in between. A former Bajajaj executive told Arundati that on an average, nearly half of these loans to existing customers are pitched via phone calls. When the Ken contacted Bajajaj finance,

they told us that they added 10 million customers to their formal financial system in the last three years. They also told us that they get a dominant portion of the loans through their point-of-sale network and digital assets. They said, and I'm quoting, loans originated by our call centers and direct selling agents account for a relatively smaller number. Our existing customers account for two-thirds of our point-of-sale financing transactions and almost all of it happens through EMI cards.

End quote. Also, like I told you earlier, after the backlash against these relentless calls, last year, Bajaj finance even updated its governance mechanism to make sure that no customer receives more than two calls a month. But if you go just by numbers, it does not seem like the volume of calls have actually gone down. In the last quarter of 2022, Bajaj finance added over 3 million customers

and gave out 7.8 million new loans. Now, according to a former senior Bajajaj executive, with this level of growth, the volume of calls is unlikely to have gone down. And that is because call centers are a moment. among its top sales channels. But while these numbers sound super impressive, it also means that Bajaj finance has to maintain this rate of growth.

For a company with a loan book, its size, that is not easy. In January this year, when Bajaj finance published its December quarter numbers, it said that its interest income grew by 27% to $2.7 billion. But guess what? The market still punished it. with an 8% fall in its stock prices on that particular day. Like an analyst told Arundhati, Bajaj finance is a prisoner of its own growth. So how does the company plan to keep up with this growth rate?

Stay tuned to find out. Bajajan's plan is quite simple. Keep adding customers and sell more to them. The non-bank is also working on getting more traffic to its website and app as a part of its omni-channel strategy. It also has 66 million customers in its franchise and it hopes to touch 100 million mark in the next five years. In a call with analysts after its December quarter results, Rajiv Jain, the managing director of Bajaj finance had said, and I'm quoting,

I don't think we need to reinvent anything. We've got to keep mining customers, end quote. But this very pushy approach can backfire. and NBFC executive told us how. They said that usually when a customer gets bombarded by calls in this manner, they will shut down all types of communication, not just with that company, but the entire industry. Another challenge is the regulatory risk.

On 27th of March, the Telecom Regulatory Authority of India or Dry held a review meeting with the top telcos in the country to discuss steps to stop unsolicited commercial communications. and discuss the use of AI to clamp down on it. But Bajarge has built this almost foolproof system of telecalling for itself over years. And clearly, so far it has paid off. So even if it has to change it, it will surely require some time. Coming up next, we take a closer look at Bajarge Finance's telecalling mechanism.

Bajarge finance has been playing the long game when it comes to telecalling. The company invested in understanding who to call. Usually, a Bajajaj customer tends to pick up calls more than other lenders, tele-callers. A former executive of the company told us that Bajaj has 40 to 45% connectivity success where people pick up their calls compared to the 30% or 40% for others. And how do you think Bajar managed to do this? By playing smart, of course. It worked with caller ID verification companies.

such as Truecaller in 2021 to get its number in the allow list. Usually, when a user tags a number as spam, the number flashes in red as spam. But as it turns out, it can be reversed to green. And then two Bajajaj executives also told us that even if there is a 0.01% chance of getting someone to take a loan, Bajajaj telecallors will put their 100% into that. In fact, even though 40% of people may pick up the calls, only 1% actually take the loans. But what about the Do Not Disturb or D&D guidelines? Any company that violates D&D guidelines on purpose could risk having their phone lines cut as penalty.

Turns out, these calls from Bajaj finance are not only made via the call centers. Even the army of Bajajaj's field agents has access to the customer database and they keep trying to reach out to customers. And it does not matter to them if they are on the D&D list or not because they call from their mobile phones. By simply switching phone numbers from one to another, they escape the D&D trap, which was anyway not laid out too well. And not just this. Bajajaj finance also gives its agents month and targets based on which they get incentives. Plus, Bajajaj does not mind spending on getting quality agents. It acquired close to 3,000. seats from TCS e-serve, which is a call center partner, inclusive of agent and equipment cost

for 51,000 rupees per seat. But the average cost of a seat in the market is about 25 to 30,000. But why is the charge paying more? Because it demanded that TCS only put graduates and post-graduates to the task. And that is because the communication skills of these agents is much better. The company also exercises a lot of control on its call center partners in terms of work and payroll policies. The company is also expanding its call center operations across eight two-tier cities where costs could be half of what it pays in metros. And right now, even though Bajaj finance is investing in creating and maintaining digital channels to reach out to customers, aggressive calling has proved to be a more dependable method and it is unlikely.

that Bajaj is going to give it up anytime soon. Daybreak is produced from the newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras. Head to the Ken.com and click on the red subscribe button

on the top of the website. I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.