30% of my portfolio is Bajfinance. While I am happy with the financials of the company a cursory google search reveals lots of bad reviews about Bajaj Finance.
Thru google maps I learned that there are 5 Bajaj Finance branches around my house in Chennai. Every single branch is rated 3*** or less. There are a plethora of bad reviews such as - hidden charges, hidden credit card issuance, inability to close out loans, poor customer service, lack of printed receipts etc. Did a search for other places in TN, tier 2, tier 3 towns and again the results are similar. Same goes for other metros as well.
Now I am sure lakhs if not crores of Indians have benifited from Bajfinance’s businesses but on an ethical level I am not very comfortable with so many people being not satified.
By the way, HDFC Home loans also has similar “bad” reviews in google.
Ethics aside would these bad reviews have an impact in the future? Say thru lawsuits, bad mouthing etc, or changes in consumer protection laws?
I’m a newbie investor and I’m confused. Any thoughts would be helpful.
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This is the reason I never invested in Bajaj Finance, I want to be where everyone in ecosystem is win win.
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It may be a good idea to find out if any lender has 5 star reviews on google. If not, you may as well ignore the reviews. It may be the “nature of the beast” i.e. industry norm. Now whether it’s good or bad is separate discussion. But human nature is such that we will rarely post good review but every bad issue gets highlighted. So if you are not comfortable, its better to exit if that gets you better sleep.
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The issue is with the 30% concentration that you have. For most banks/NBFCs, the online reviews will be similar. My advise to you will be to keep allocation to 5-10% for any stock.
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Incentives matter.
More often than not people have an incentive to write a bad review about a given product/service. They could be expecting a refund, or a discount or a call back from the company after writing a bad review. There’s also loss aversion at play there.
But there’s no incentive to write a good review. Nothing to be gained, and takes too much effort, which is why the bad reviews could be asymmetrically skewed against the good.
Having said that, Bajaj Finance is notorious for mis selling products, over charging and so on. But then HDFC bank also had similar bad reviews while it was compounding it’s shareholders wealth over more than 2 decades. Same for another multi bagger Vaibhav Global, which again was a B2C business. Online reviews should be a negligible factor in most cases while other factors such as NPAs, growth rates, capital adequacy, return ratios, etc. would matter much more in a lending business than just online reviews.
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I recently came across two small shopkeepers talking between themselves about Bajaj Finance and badmouthing it. Reason being(as per the complaining shopkeeper) …
They started charging fine even before the payment due date had arrived (15 rupee already on a loan of 3000 and due date was still 6 day away).
I asked why take loan from them in that case …? He answered where will I get the money then .
Thing is , for the target customers of BF, there are no other viable options . That is a very good reason to invest.
On the other hand, this business is eternally maligned business of the great Shylock … no point in complaining about the ground reality .Everyone has different threshold on moral issues but my line of thinking is that these issues are not a dealbreaker for the debtors ,why should it bother me …I have to pay much more tax out of my profits as well 
Disc : Not invested…always seemed costly…even when it was 2.5K 
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First question you need to ask yourself is Have you ever written a review for bank or any lending company?
Even if company is giving good service etc, getting good reviews would be very difficult as lending etc is very transactional in nature. A resort stay or a nice dinner is more emotional in nature and hence you would also see good reviews more.
However if the staff is rude or customer service is bad for bank/nbfc etc, one would still bother to write a review to vent out the frustration.
But yes, debt traps are bad for anyone and there is an ethical angle when it comes to investments in these firms.
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Please be aware in this age of influencers, review can be highly biased so cannot be the “only” parameter to judge anything.
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