India’s largest retail non-banking finance company reported a 22% rise in consolidated profit after tax to ₹4,765 crore for the April-June quarter. However, the lender flagged “unexpected” stress in its unsecured MSME loan portfolio due to over-leverage among borrowers and rising early-stage delinquencies. With loan loss provisions increasing to ₹2,120 crore and restructuring of MSME loans rising sharply, the company plans to tighten lending norms and focus on portfolio quality. Credit cost is expected to remain elevated in FY26, with growth in disbursements slowing amid sectoral headwinds.
Bajaj Finance, India’s largest retail non-banking finance company (NBFC), posted a consolidated profit after tax (PAT) of ₹4,765 crore for the April-June quarter, marking a 22% year-on-year increase. Consolidated net interest income also rose 22% to ₹10,227 crore.
Despite steady earnings growth, the lender highlighted “unexpected” stress in its unsecured micro, small, and medium enterprises (MSME) loan portfolio. Rising early-stage delinquencies and over-leverage among customers have led to a 26% year-on-year surge in loan loss provisions to ₹2,120 crore.
Over-leverage of customers across product segments remains a pain point, and we are taking corrective measures to reduce the exposure of borrowers with multiple loans.”
Vice Chairman and Managing Director Rajeev Jain, Bajaj Finance
The NBFC is winding down its two- and three-wheeler loan portfolio, which has contributed to higher delinquencies. Loans worth ₹219 crore categorized as ‘standard’ were restructured during the quarter — significantly higher than the typical quarterly restructuring rate of ₹40-50 crore. Jain indicated the restructuring rate may remain elevated in the current quarter before stabilizing.
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Overall stage-2 and stage-3 assets — loans overdue by over 60 and 90 days, respectively — stood at ₹878 crore, with stage-2 assets rising by ₹324 crore due to MSME borrowers facing short-term cash flow issues. To mitigate the risk, the company is offering restructuring options and making stage-3-level provisions.
The gross non-performing asset (NPA) ratio rose to 1.03% from 0.86% a year ago, while net NPA increased to 0.50% from 0.38%. Elevated slippages in the MSME segment (1.76% from 1.36%) and in the two- and three-wheeler book (6.38% from 5.03%) have contributed to this rise. The company expects its credit cost to remain around 1.85-1.95% for FY26, with improvements anticipated from the third quarter onwards.
Bajaj Finance is targeting 15% growth in assets under management (AUM) for FY26, but incremental disbursements are likely to remain flat or lower due to tighter lending standards. Jain emphasized that the “top of the funnel” remains active, ensuring a strong credit pipeline, but stressed the need to bring portfolio quality back to pre-COVID levels.
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