IN A QUIET, tree-lined lane in Pune’s Viman Nagar, far removed from the bustle of Mumbai’s central business districts, sits one of India’s most formidable financial engines, Bajaj Finance Ltd (BFL). Valued at over $75 billion, it now ranks 52nd among the world’s most valuable financial services companies by market cap.

It’s here that Rajeev Jain, the 55-year-old vice chairman and MD of Bajaj Finance, greets Fortune India on an October afternoon. Dressed casually in a dark blue tee and faded blue jeans, he could easily pass off as a startup founder rather than the highest paid non-bank executive at ₹105 crore (salary plus stock options). But behind the understated demeanour is an architect of a near two-decade compounding story, 34% revenue growth and 48% profit growth annually, transforming a modest two-wheeler non-bank lender into one of India’s most admired financial powerhouses.

“I’m a workaholic… and if you take workaholism one notch higher, the manifestation of it is, we have a missionary zeal to make things happen,” says Jain, a line that feels prophetic given that he had to reassume charge as MD following the sudden exit of Arup Saha, his hand-picked successor. Groomed for over seven years, Saha quit within months over an unconfirmed brush for the top job at IndusInd Bank. Jain will now stay at the helm till 2028; his bigger task though is to keep the compounding engine running even as he works on a board-mandated succession timeline.

The growth feeder

Under Jain, BFL has showcased a performance that would make even a Berkshire Hathaway purist pause. BFL delivered 25.7% CAGR and 35.15% CAGR over the past 5- and 10-year periods, respectively, vs 18.26% and 13.58%% for Berkshire. In the 18 years to FY25, assets under management crossed ₹4.16 lakh crore, but more pertinently, return on assets (RoA) has surged from 0.7% to 4.4%, and return on equity (RoE) from 2% to 19.5%, metrics that dwarf many global peers. Berkshire, by contrast, clocks an RoA of 5.44%, and an RoE of 9.64%.

At a market cap of ₹6.74 lakh crore, partly driven by a premium valuation multiple of 8x price-to-book, the franchise has been compounding earnings at 29% over a decade, implying profits could double every two and a half years. If that pace sustains, BFL could cross ₹30,000 crore in post-tax profits by FY28, giving a further fillip to valuations.

Yet, the man who has sweated it out to build this behemoth is more than happy to credit the late Nanoo Pamnani, and chairman Sanjiv Bajaj for creating a “conducive environment”. In conversation, he keeps circling back to a common theme — the relentless pursuit of going from “good to great”.

“If you are happy with your current state, you’ll never be great,” he says, referencing Jim Collins’ famous book. “Great companies are never happy with the current state. Continuous transformation is at the heart of transitions from good to great,” says Jain.

Complacency, to Jain, is the corporate equivalent of entropy, the gradual slide into disorder masked by the illusion of success. “Remaining static is not an option… A company that stands still doesn’t realise it’s already moving backward,” says Jain.

At the top, the real discipline lies is not celebrating what went right, but in anticipating what could go wrong. It’s a thought that brings up Charlie Munger’s famous mantra of “invert, always invert”. Jain concurs. The past 18 years, he says, have been a bootcamp in surviving crises. “Taper tantrum, demonetisation, the 2019 slowdown, Covid. Each of these looked fatal at the time,” he recalls. “After navigating these, you philosophically feel you can handle anything,” says Jain with a smile.

That crisis muscle, in some sense, defines Bajaj Finance’s resilience. “Running a financial services business in an emerging market makes you tougher. Liquidity freezes, regulations change, sentiment turns on a tweet. But you learn to survive through all that,” elaborates Jain.

Having built resilience, Jain faces a much subtler test — not of survival but one of abundance.

The See’s Candies moment

In a compounding business, growth itself can become a sweet problem. Berkshire Hathaway learnt that with its 1972 acquisition of See’s Candies, a small California-based chocolate maker but a capital efficient machine.

Buffett called it the prototype of a dream business: a company that generated cash with little reinvestment need. But even See’s faced a paradox: how do you invest profitably when your core business can’t absorb more capital to generate higher returns? “We’ve tried 50 different ways to put money into See’s. If we knew a way to put additional money into See’s and produce returns a quarter of what we’re getting out of the existing business, we would do it in a second. We love it. We play around with different ideas, but we don’t know how to do it,” Buffett had commented.

So, is Bajaj Finance, too, approaching its own See’s Candies moment after 18 years of near-flawless growth? The challenge for BFL is whether every incremental ₹1 of capital can still fetch 4.4% RoA and 19.5% RoE that define the franchise today. Berkshire chanelled See’s surplus cash into new businesses, but Jain sees BFL’s dilemma playing out differently.

“It’s a fair question,” he admits, “We’re not there yet… Maybe five years from now, we’ll reach that point.” The See’s Candies equation for BFL is structural. As Bajaj Finance subsidiarises its arms and with Bajaj Housing Finance already listed, regulations will require the parent to reduce its stake from 88.70% to 75% within five years, in addition to taking its other subsidiary public. “That itself creates an excess capital situation in the firm,” says Jain. The effect is compounded by a narrowing gap between balance sheet growth (24%) and profit growth (22%). “Logically, I would like both to grow [at rates] very close to each other,” Jain says, “but that means I am not consuming capital”.

Yet, unlike Berkshire, which deployed See’s profits into other businesses, Jain believes the company will channel the surplus into organic growth within its existing ecosystem. “The journey of building good businesses or someday creating great businesses requires us to build organically because we enjoy doing it. The fun of building a business is as important to us as the benefits of a business. So, we will remain organic.”

To stay organic, Jain isn’t looking inward, that is, building new engines of growth within the franchise itself. His playbook is modelled not on conglomerate investing such as Berkshire’s, but on platform reinvention; that entails going the Amazon way.

The Amazon way

If See’s Candies represents the past of capital-light compounding, Amazon represents the future—a flywheel of data, technology, and customer engagement that monetises attention and ecosystems rather than just products.

It’s no coincidence that Jain is influenced by the Amazon playbook.

“The AI age gives good companies a chance to become great. We want to use this opportunity [to go] from being a good company to hopefully being a great company,” he says.

Post-Covid, BFL has created “the Amazon of financial services,” a super app that offers loans, insurance, payments, mutual funds, gold loans, and even live shopping. The app already generates over 15% of BFL’s loan disbursals with a goal to hit 50% within three years. If Amazon has 14 scrolls, the Bajaj Finserv app has 14 scrolls too. If imitation is, indeed, the sincerest form of flattery, BFL has executed it well.

Like Amazon, BFL is now monetising engagement. The app has already earned ₹50 crore in ad revenue in FY25, with ambitions to scale that manifold. “Just as Amazon makes more from advertising than from selling goods, we’ll make more from engagement than from loans,” says Jain.

It’s a radical idea for a lender but Jain is convinced: “Digital is not a strategy. It’s a necessity. We’re building an ecosystem, not a product.”

In other words, engagement is BFL’s new moat.

The engagement challenge

For all his technological evangelism, Jain acknowledges a structural truth: financial services are transactional by nature. “That’s the constant battle,” he says, “between shareholder priorities and customer engagement”.

To solve it, BFL is investing heavily in payments and ONDC-linked commerce, even though the payments business burns over ₹200 crore annually. “It’s engagement,” Jain shrugs, adding, “If you’re in a racecourse, you need a racehorse. You can’t show up on a pony.”

The super app now offers everything from utility bill payments and mutual fund investments to government services, digital locker access, and charity donations. “I get nothing from it,” he says, showing his phone. “I don’t want anything, just engagement. Over time, it creates connect in the customer’s mind: need anything financial, hit the app,” says Jain.

That’s the Amazon effect he’s after: habit as moat.

Capital allocator’s discipline

Despite the Amazonian ambition, Jain remains an old-school capital allocator at heart, perhaps his most Buffett-like trait. “We are not a lending business,” he insists. “We are a risk business.”

That distinction defines how he runs Bajaj Finance’s 31 lines of business: from consumer loans to MSME, gold loans, rural finance, and payments. Each vertical must justify its existence not through size, but through return. Jain treats capital like a portfolio manager rather than an operating executive, ensuring that every rupee earns its place on the balance sheet. “I allocate capital across businesses like a model portfolio. It defines the right mix of growth, return, ratios, and risk thresholds in aggregate, which I’ve then translated into these 31 portfolios. That framework drives our outcomes. I don’t see any risk to sustaining it in the coming years, though some businesses will, of course, go through their ups and downs,” explains Jain.

His rule is simple: “Every business line at Bajaj Finance must earn its right to exist. If a business fails to reach scale or profitability within a seven-year window, it will be shut down.”

Between 2011 and 2014, BFL ran an infrastructure and construction equipment lending business that accounted for 17% of its balance sheet. Jain shut it down despite the size. “We realised it was not the best business to be in,” he says simply. “We are not afraid to walk away.”

That learning is now institutionalised. “We’ll never let a business grow to 17% before realising it’s wrong. The yardsticks and tracking systems today are far superior,” says Jain.

One of those systems is what he calls KID (Key Information Document), a 6,000-variable radar that tracks everything from underwriting and operations to risk. “Retail is detail,” Jain says.

That obsession with detail extends to how Jain thinks about growth itself: not as a race to add branches or chase volumes, but a quest for precision and deeper presence.

Where the growth lies

For BFL, a large part of its growth now comes from the 100-plus cities where it already operates. Going deeper into smaller towns still offers higher growth rates, but the economics turn tricky as the cost of distribution and risk management leave only a “very thin sliver” of profitability. After years of experimentation, BFL cracked its rural lending model by FY18, and has since stabilised its presence. “Over the past four quarters, our presence has been in and around 4,000-4,200 cities,” he says.

The focus now is on “deepening” existing markets. “The good thing is we have peaked on investment. Over the coming five years there will be equal emphasis on hunting and on farming and the next five will see more hunting than farming,” says Jain.

Among the next engines of growth, Jain singles out MSMEs—a fragmented ₹35 lakh crore credit market, where Bajaj’s share is under 5%. “We have the customers but not the wallet. That’s our next frontier,” says Jain.

The gold loan business is another bet that could double to ₹35,000 crore within two years. “It’s already among the top five in the country,” he notes. Yet, profitability not growth is his yardstick. “I don’t track growth; I track ratios,” he says. “In lending, you can lend your way to growth. Getting your last couple of instalments is important as that’s where the profit is.”

Equally, he’s cautious about businesses that don’t clear the hurdle rate.

That discipline is why BFL is not aggressively building its used and new car loan portfolio as ROEs hover at just 12-13%, even as it is winding down the two-wheeler financing business.

When dreams fuel ambition

For Jain, the next decade will be defined by AI-driven operational transformation. “Retail is moving from batch to real time, just the way it is today between e-commerce and quick commerce.” Vision AI has already cut customer onboarding time from 24 minutes to 14 minutes. By FY26, AI will drive customer communications, loan assessment, and fraud detection.

The payoff: faster risk response and lower costs, with a cost-to-income ratio of 32.7%, already among the industry’s lowest, is projected to fall towards 30%.

“The only risks that really worry me,” Jain admits, “are geopolitical shocks and cybersecurity. The more you invest in cyber security, the more you realise how insecure the world really is.”

Yet, for a man obsessed with managing risk, it’s only fitting to ask the question that every successful NBFC in India must eventually confront: should it become a bank?

Jain’s answer is nuanced. “We already have ₹75,000 crore of retail and corporate liabilities,” he says. “If the liability side keeps getting easier, we don’t need to be a bank.”

He points to the Reserve Bank of India’s recent reforms that eased external commercial borrowings and deposit mobilisation. “If engagement doesn’t depend on a checking account but on digital infrastructure, we’re already there,” he says, adding, “We don’t foresee a need to be a bank, at least not in the medium term.”

But Jain does see BFL playing a key role in financial inclusion. Each year, the company, which currently caters to over 110 million customers, onboards millions of new-to-credit individuals into the formal financial system. “Last year, if you take 17 million customers, 11 million were from the Credit Bureau with a score of 750+. That means they were all good customers, but 6 million were new to credit. Of this, over time, 96-97% will remain credit worthy,” feels Jain.

For Jain, lending is also about enabling aspirations. “Put simply, financial services help people realise their dream,” he says. A dream that also fuels BFL’s ambition as Jain puts it. “We want to be among the Top 5 financial institutions in India as size is essential to relevance in financial services.”