Bajaj Finserv Banking and Financial Services Fund positions itself as a strategic pick for long-term investors

THEBUSINESSBYTES BUREAU

PUNE, NOVEMBER 15, 2025

As investors increasingly seek ways to balance potential returns with long-term stability, sector-focused funds continue to gain attention for their ability to tap into fast-growing areas of the economy. The newly launched Bajaj Finserv Banking and Financial Services Fund positions itself squarely within this space, offering exposure to India’s expanding BFSI ecosystem — from banks and NBFCs to insurers, asset managers, and fintech innovators.

The New Fund Offer (NFO) which opened on November 10, 2025, will close on November 24, 2025, with the scheme set to reopen for subscription within five business days after allotment.

India’s financial landscape is poised for profound transformation over the next decade as the country charts its path toward becoming the world’s third-largest economy by 2030, with a projected GDP of USD 7.3 trillion. Key growth drivers such as rapid digitalisation, infrastructure expansion, and a young workforce are expected to fuel this rise, placing the BFSI sector at the centre of economic activity. Estimates indicate that financial assets may need to grow nearly twenty-fold, with banks alone requiring an additional USD 4 trillion in capital over the next twenty years.

This backdrop strengthens the relevance of a fund focused on financial services. Over recent years, credit disbursement to priority sectors has surged by nearly 85% since 2019, UPI transaction values have multiplied almost five times in four years, and microfinance outreach has expanded to around 79 million borrowers. A healthy credit-to-deposit ratio of 79% further underscores robust financial intermediation, making the sector a compelling long-term play for investors.

The Bajaj Finserv Banking and Financial Services Fund adopts a disciplined, research-driven stock selection process. Starting with a broad universe of 1,100 companies, the fund narrows its focus to 180–200 BFSI players using its megatrends lens. It then applies its proprietary InQuBe framework to curate a diversified portfolio of 45–60 companies across various sub-sectors, aiming to balance growth potential with risk management.

The BFSI sector’s evolution over the past two decades highlights the opportunity. Market capitalisation has jumped more than 50 times — from Rs. 1.8 trillion in 2005 to Rs. 91 trillion in 2025 — while its contribution to GDP has risen sharply from 6% to 27%. Banks have strengthened their balance sheets, with GNPA levels declining from 5.8% to 2.2% and credit costs falling significantly. NBFCs have recorded robust profitability, insurers have seen their assets under management rise tenfold, and mutual fund AUM has grown 45 times, reflecting deepening financial participation across the country.

The fund also taps into powerful megatrends shaping India’s financial future. Non-cash transactions are projected to jump from 38% in FY23 to 62% in FY28, financial inclusion has expanded with Jan Dhan accounts reaching 540 million, and rising household income levels are expected to push nearly 75% of Indian families into middle- and high-income brackets by 2030. At the same time, fintech innovations are enabling broader access to credit, especially among first-time borrowers and women entrepreneurs.

With BFSI valuations currently below their 14-year averages and fundamentals remaining strong, the timing appears favourable for investors considering sectoral exposure. The sector’s weight in the Nifty 50 has risen 2.6 times over two decades, now at nearly 38%, while opportunities beyond traditional banking have expanded significantly. A recent 100 bps repo rate cut by the RBI is expected to spur further credit growth, adding momentum to the sector.

Designed for investors with a long-term horizon and an understanding of sectoral investing, the Bajaj Finserv Banking and Financial Services Fund aims to capture the growth potential embedded in India’s financial transformation. With its diversified exposure to banks, NBFCs, insurers, asset managers, and fintechs, the fund offers a structured pathway to participate in the country’s evolving financial ecosystem.