To Be or Not to Be a Bank: Bajaj Finance, Sanjiv Bajaj and RBI Face a Defining Question<\/p>\n
As Bajaj Finance continues to scale at a pace few financial institutions in India can match, a fundamental question is gaining urgency: does the country\u2019s largest non-banking financial company (NBFC) need to become a bank? Or is India\u2019s regulatory framework ready to support large NBFCs as durable, long-term alternatives to banks?<\/p>\n
At the heart of this debate is Sanjiv Bajaj, Chairman and Managing Director of Bajaj Finserv, and the Reserve Bank of India (RBI), which has historically maintained a cautious stance on granting banking licences to large business houses.<\/p>\n
The scale Bajaj Finance has achieved is central to this discussion. As of September 30, its loan book stood at \u20b94.62 lakh crore, growing at a robust 24 percent year-on-year. For context, Kotak Mahindra Bank reported deposits of \u20b95.3 lakh crore during the same period, with growth of about 15 percent.<\/p>\n
If Bajaj Finance were a bank today, it would already rank as the fifth-largest private sector bank by balance sheet size. Maintaining its guided growth trajectory of 20\u201322 percent annually could push its assets under management beyond \u20b910 lakh crore by 2030, potentially making it one of India\u2019s largest financial institutions overall.<\/p>\n
This rapid expansion naturally raises questions about funding costs, regulatory parity, and systemic risk.<\/p>\n
Also Read : SEBI Eyes Tighter Open Offer Norms With Mandatory Information Sharing By Target Firms<\/a><\/p>\n When asked directly whether Bajaj Finance would eventually need to become a bank to sustain such scale, Sanjiv Bajaj\u2019s response was unequivocal.<\/p>\n \u201cNot really. First, as per the laws of the country, we can\u2019t be a bank because business houses are not allowed to be a bank,\u201d he said.<\/p>\n<\/blockquote>\n He argued that the RBI\u2019s current NBFC framework\u2014particularly the multi-tier regulatory structure\u2014already places Bajaj Finance and Bajaj Housing Finance in the \u201cupper layer,\u201d subjecting them to enhanced supervision, governance norms, and compliance standards.<\/p>\n According to Bajaj, this structure allows large NBFCs to raise funds through a diversified mix:<\/p>\n Bank borrowings<\/p>\n<\/li>\n Debt markets<\/p>\n<\/li>\n Fixed deposits and debentures from retail investors<\/p>\n<\/li>\n<\/ul>\n \u201cI think if we continue doing that into the next decade, it should take us to the kind of numbers that you\u2019re saying,\u201d he said.<\/p>\n A common argument in favor of NBFCs becoming banks is access to low-cost savings deposits, typically priced around 3.5 percent. Bajaj, however, dismissed this as an oversimplification.<\/p>\n \u201cFirstly, banks\u2019 average cost of borrowing is not 3.5 percent,\u201d he said. \u201cSecond, we compete in consumer lending, SME lending, and corporate lending with the best of banks. If it was so obvious, we would not be doing as well as we are.\u201d<\/p>\n<\/blockquote>\n In his view, competitive advantage in lending is driven more by underwriting discipline, risk pricing, and execution than by deposit access alone.<\/p>\n Rather than a banking licence, Bajaj outlined a narrower regulatory ask.<\/p>\n \u201cOne of my few asks from RBI is, like RBI provides a liquidity backstop to banks\u2014the lender of last resort\u2014they should offer this to upper-layer NBFCs too,\u201d he said.<\/p>\n<\/blockquote>\n Banks receive this privilege because they accept deposits from retail savers and perform quasi-fiscal roles such as priority sector lending and providing basic banking services. Bajaj believes that if certain norms around liquidity access and payments are aligned for large NBFCs\u2014while still protecting small depositors\u2014it could create a strong, scalable credit ecosystem without forcing NBFCs into banking structures.<\/p>\n From the regulator\u2019s perspective, the concern is not scale but structure. RBI has consistently resisted granting banking licences to conglomerates due to risks of connected and related-party lending.<\/p>\n Banks also play a systemic role:<\/p>\n They accept deposits from the most vulnerable savers<\/p>\n<\/li>\n They are subject to stricter capital and prudential norms<\/p>\n<\/li>\n They are used as instruments of policy transmission<\/p>\n<\/li>\n<\/ul>\n RBI\u2019s preference has been for large NBFCs to convert into banks if they want access to similar privileges\u2014but without opening the door to corporate control of banks.<\/p>\n Sanjiv Bajaj challenged the connected-lending concern head-on.<\/p>\n \u201cToday, I know what kind of monthly data dumps go from us as an upper-layer NBFC to the regulators. With AI, there is no reason why you cannot unearth interconnected lending,\u201d he argued.<\/p>\n<\/blockquote>\n His contention is that advances in data analytics and artificial intelligence could allow regulators to detect related-party risks far more effectively than in the past, potentially weakening the core argument against business houses owning banks.<\/p>\n This view is gaining quiet traction, especially as global regulators increasingly deploy technology-driven supervision.<\/p>\n Bajaj is not alone in pushing this debate. Several large corporate groups are keen on banking licences, especially as foreign financial institutions increase their stakes in Indian banks and NBFCs. The underlying argument is simple: if India aims to grow at 8\u20139 percent annually and achieve its \u201cViksit Bharat 2047\u201d vision, domestic capital will need to play a central role.<\/p>\n Yet every RBI governor, including the current one, has stopped short of embracing this shift.<\/p>\n Despite the regulatory uncertainty, Sanjiv Bajaj remains confident.<\/p>\n \u201cFor now, we can grow Bajaj Finance at the same pace we have over the past two decades, even without a banking licence,\u201d he said.<\/p>\n<\/blockquote>\n Whether AI-enabled supervision eventually shifts RBI\u2019s stance remains to be seen. But the question\u2014to be or not to be a bank<\/em>\u2014is no longer academic. It sits at the intersection of regulation, technology, and India\u2019s next phase of financial expansion.<\/p>\n To Be or Not to Be a Bank: Bajaj Finance, Sanjiv Bajaj and RBI Face a Defining Question As Bajaj Finance continues to scale at a pace few financial institutions in India can match, a fundamental question is gaining urgency: does the country\u2019s largest non-banking financial company (NBFC) need to become a bank? Or is […]<\/p>\n","protected":false},"author":4,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-19246","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/19246","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=19246"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/19246\/revisions"}],"predecessor-version":[{"id":19248,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/19246\/revisions\/19248"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/19247"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=19246"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=19246"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=19246"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=19246"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Why Sanjiv Bajaj Says \u2018Not Really\u2019 to a Banking Licence<\/h2>\n
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The Cost of Funds Argument\u2014and Bajaj\u2019s Rebuttal<\/h2>\n
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What Bajaj Wants From RBI Instead<\/h2>\n
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Why RBI Remains Cautious<\/h2>\n
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The AI Argument: A New Twist in an Old Debate<\/h2>\n
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A Broader Industry Question<\/h2>\n
For Now, Confidence Without a Bank Tag<\/h2>\n
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