The move signals a sharp pivot from the company’s earlier aggressive growth strategy, reflecting the challenges of balancing innovation with sustainable returns in a competitive and regulated financial landscape.
Under the previous five-year plan, Bajaj Finance sought to establish itself as a dominant player in the payments and credit card markets. It aggressively expanded offerings such as UPI, pre-paid wallets, Merchant QR codes, bill payments, and FASTag, according to Rajeev Jain, managing director of Bajaj Finance.
The company also targeted substantial market share growth in payments and strengthened co-branded credit card partnerships with RBL Bank and DBS Bank India.
However, under the revised plan, the lender has tempered its goals, reducing its market-share target for the payments business to 1% of gross merchandise value (GMV) by FY29, down from the earlier target of 3%.
It has also decided to exit its co-branded credit card distribution partnerships, citing regulatory restrictions imposed by the Reserve Bank of India (RBI) that limit the role of co-brand partners to merely sourcing customers.
“Given the new regulatory environment where they’re principally saying you can only do (credit card) distribution and nothing else, it did not make sense for us to monetize our customer base for just ₹1,500 or ₹2,000 per customer,” Jain told Mint. “As a trade-off, we found it more viable to focus on other, more profitable opportunities with our customers.”
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Explaining the rationale behind re-evaluating Bajaj Pay, the company’s payments platform, Jain said, “After three years of work and if you use Bajaj Pay, you would find that the functionalities are virtually similar to a Google Pay and PhonePe. It’s a product of huge inertia. And we are a public company. We have to publish results every quarter. We have invested virtually $100 million in building on Bajaj Pay over the last three years. It made sense that clearly we focus on viability of the payments business.”
As of end of September, Bajaj Finance had facilitated 32.4 million UPI transactions, 8.57 million bill-pay transactions, and deployed 3.4 million QR codes for merchants. Despite these milestones, the company has struggled to achieve profitability in the payments business, even after investing $100 million in its Bajaj Pay platform over three years.
According to data from National Payments Corp. of India, Bajaj Finance ranked 24th in the UPI payment business with 8 million transactions for the month of November. On the other hand, players like PhonePe dominated the market with 7.4 billion transactions, followed by Google Pay with 5.7 billion transactions and Paytm with 1 billion transactions.
PhonePe accounted for 47% of the transactions volume, while Google Pay accounted for 37% and Paytm 6.9%.
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Meanwhile, Even as Bajaj Finance scales back in payments, it has set ambitious growth goals under BFL 3.0. The company aims to double its assets under management (AUM) to ₹8 trillion and expand its customer base to 200 million by FY29.
Jain believes the AI-enabled operating model will be instrumental in meeting these targets.
That said, Bajaj Finance is well on track to meet its earlier-set targets. The non-bank lender’s AUM is set to touch ₹4 trillion by fiscal year 2025, a target it had set three years ago.
Betting big on AI-driven efficiency
At the heart of Bajaj Finance’s revised strategy is a robust adoption of AI, aimed at improving profitability and productivity.
The company has transitioned 500 of its 6,000 agents into virtual roles, which Jain claims will triple customer conversion rates and reduce costs by at least 40%. The non-bank lender is also hoping to see its credit cost, which currently stands higher at 210 basis points, normalise to pre-covid level of 185-195 basis points.
Bajaj Finance is also piloting 29 AI use cases, ranging from customer interactions to product recommendations, with plans to expand these initiatives over the next 12–15 months.
Jain highlighted that AI-powered links will soon accompany promotional messages sent via SMS and WhatsApp, allowing customers to interact with virtual agents.
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“Large scale AI adoption is not happening at the organisation level across many banks and non-banks. While the intention looks good, we will have to see how BFL will progress from here,” said Ashutosh Mishra, head of institutional equities research at Ashika Equity Broking.
To support this transition, Bajaj Finance is investing heavily in hiring talent with deep expertise in AI, ensuring its capabilities match its ambitions.
