Rahul Bajaj will be stepping down as the non-executive Chairman of Bajaj Finance, a post he has held for over three decades since the inception of the company in 1987. His son Sanjiv Bajaj, currently the Vice Chairman of the company, will take over as the Non-Executive Chairman of with effect from August 1, 2020
The company informed the stock exchanges that as part of succession planning, Rahul Bajaj has decided to demit the office as Chairman of the Board with effect from the close of business hours on July 31, 2020.
He will continue to serve as a non-executive non independent director.
Sanjiv Bajaj is also the Chairman and Managing Director of Bajaj Finserv, and the Chairman of Bajaj Allianz. He has been the Vice Chairman of Bajaj Finance since October 2013. He has been the MD and CEO of Bajaj Finserv since2008. Bajaj Finserv operates in the insurance business through Bajaj Allianz Life Insurance Company and Bajaj Allianz General Insurance Company, as well as in the lending business through Bajaj Finance Ltd.
The announcement came as Bajaj Finance reported its financial results for Q1, where it reported a 19.4% drop in net profit year-on-year to Rs 962.32 crore as compared to a net profit of Rs 1,195.25 crore in the same quarter last year.
The company said in a statement that its business operations in Q1 FY21 were considerably impacted due to COVID-19 pandemic and the consequent lockdowns which remained for most of Q1 FY21. “It has resulted in significantly lower business acquisition and constraints on recovery of overdues from customers,” Bajaj Finance stated.
Bajaj Finance restarted its urban B2B, rural B2B, auto finance, gold loans and loan against securities businesses from May 10, 2020 with stringent loan to value (LTV) and underwriting norms and focus on existing customers. Home loans and credit card distribution businesses were restarted from June.
It also said that the consolidated moratorium book has reduced to Rs 21,705 crore (or 15.7% of Assets Under Management) from Rs 38,599 crore (or 27% of AUM) as of 30 April 2020 owing to reduction in bounce rate coupled with better collection efficiency.
Following these announcements, Bajaj Finance stock fell by over 6% to Rs 3,220 on the Bombay Stock Exchange. With the company reporting a drop in profits, the stock closed 4.31% lower at Rs 3,292.90.