‘The current market size of the life care segment is of about Rs 5,000 crores of untapped potential’

Recently, Bajaj Financing has ventured into life care financing in healthcare. Devang Mody, President Consumer Business, Bajaj Finance explains to Raelene Kambli on the opportunities for the company in this segment of business and its way forward

This a new segment of financing. Why did you choose to venture into this segment? How much of this segment will contribute to your business?

In the retail financing segment, we are present in consumer durable financing, digital product financing, furniture financing and recently extended it to financing options for lifestyle segments. All our financing segments are in the discretionary spends category.

We have a reason to believe that ‘life care’ can be a large discretionary spend category in India. This segment caters to the medical elective procedures. Since these are elective procedures, they are not covered by medical insurance. Today customers desire to spend on best medical facilities for themselves and their families. Finance for discretionary and elective procedures is common in the western countries. We (Bajaj Finance) increase the spending power of our customers (through our products), to fulfil their desires without burning a hole in their pockets. With our deep understanding of retail financing, we are in best position to cater to the segment who would want to avail these elective procedures.

The current market size is of about Rs 5,000 crores of untapped potential, which is fast moving from an un-organised segment to an organised one.

Which are the areas of discretionary procedures that you would be financing?

We have begun offering easy EMIs on elective procedures like hair restoration, knee replacement surgery, all knee care-related procedures, IVF, maternity care treatment, eye care treatment- lasik, eye cataract, ICL and retina surgery, dental care treatments, bariatric surgery and selective laproscopic procedures.

What business model did you choose to enter this segment of financing and why? For example, your release mentions about you partnering with companies?

The business model is similar to our sales financing business. With life care finance, we intend to convert the medical bills of patients opting for elective procedures into easy EMIs. The reason why we have chosen to cover only elective procedures at this point of time is because these procedures have considerably low risk and minimal insurance coverage. The market of these procedures continues to grow at 18 per cent Y-O-Y. We are also expecting a shift in the consumption pattern for these services as more and more people prefer getting these procedures done at places that hold some aspirational value.

Proposition for our partners (in this case doctors and hospitals offering elective treatments) has increased foot fall of customers due to easy access to EMI. For this, our partners bear the sub-venation on behalf of customers.

Who are your partners in this venture and how many more partnerships is Bajaj Finance looking at by the end of this year?

We launched the business about eight months ago. Currently, we are active in metros and expanding our geographic presence to tier-II locations. We have over 15 active relationships that include Mydentist, Richfeel, DHI, Vibes, Enhance, Centre for Sight, Partha Dental, EyeQ, Axiss Dental, Denty’s, Vasan Dental, Cloudnine, My Family Dentist Delhi, Manipal Ankur, Venu Eye New Delhi, Spectra Eye New Delhi and Dr Agarwal’s.

We are looking to tie-up with more partners with a national or regional presence.

What is the advantage that you have in these partnership?

More and more customers today want to opt for these procedures and we have the role to enhance their need and meet aspirations by paying in EMIs.  Hence, we will need to tie up with these partners to service their needs. Most of these partners are well entrenched in these customer segments with great brand equity.  Our partnership with them will help us get access to their customers while servicing their needs. This, in turn, will help us cross sell financial service products to those customers to enhance our relationships with them.

What role will these partners play in this venture?

In medical procedures (especially elective procedures), we have witnessed a pattern in which most consumers aspire to avail premium services but due to budget constraints and non-availability of an easy finance option or insurance coverage, they settle for basic services. The main role of our partners is to pitch our finance product to the customers, it will help them upsell in doing so. Apart from this, we will work closely with our partners. On basis of their feedback, we will develop different products that will better suit customers’ needs.

Which segments and geographies have seen the maximum traction in Life care financing?

The figures of early business suggest that metros cities in Western and Southern India have witnessed good traction. We are working on initiatives towards increasing traction in other locations as well.

By the end of FY17, we hope to have more traction.

From a category standpoint, we have seen that the categories such as dental care, hair restoration and cosmetic care and stem cell storage, where there is no insurance coverage, have picked up faster than categories that have some insurance coverage. We believe as awareness increases customer activation will also increase.

What are the total disbursals of loans that Bajaj Finance has done at the end of the first quarter of FY 2016 -2017. How much does it expect?

The total disbursals in Q1 FY17 are a little over Rs 18 crore, while we expect this to go up to Rs 120 crore by the end of this financial year.

Who are your competitors in this space and how will you differentiate yourself from them?

Since we launched this category in India, we don’t have any competitors as on date. However, with the market estimated at Rs 5,000 crore and slated to grow by 18 per cent Y-O-Y, we will see the market expand and new players entering this segment helping to build it further.

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