Bajaj Finance Ltd is implementing a comprehensive strategy to limit exposure to over-leveraged borrowers, with managing director Rajeev Jain announcing plans to halve the share of new loans to customers with three or more lending relationships to 3.5% by March 2027. According to reports from Mint, the company has already reduced this share from 14% to 7% in loan originations, demonstrating significant progress in risk management. Jain emphasized that "three personal loans is a single univariate metric that continues to trouble us," highlighting the company's focus on ultra-low credit metrics to protect credit quality.
Bajaj Finance delivered robust financial results in Q2, with profit before tax growing 29% to ₹8,537 crore before macroeconomic provisions. As reported by Investing.com, the company's net interest income rose 24% to ₹13,335 crore while assets under management grew 26% year-on-year to ₹5.84 trillion. The gold loan book portfolio now represents 4.1% of the balance sheet, reaching just above ₹24,000 crore as of Q2, with the company adding 320 gold loan branches during the quarter to expand its network to 2,022 branches. Management expects significant tailwinds from the continued wind-down of the captive book, which is now down to ₹2,400 crore.
During the quarter, Bajaj Finance made a macro-economic provision of ₹337 crore, bringing total loan losses and provisions to ₹2,166 crore for the quarter, up from ₹2,080 crore a year ago. As reported by Mint, had it not been for this prudent measure, loan losses and provisions would have declined by 12% year-on-year to ₹1,829 crore. The rise in provisions also reflected deterioration in asset quality, with stage 2 and 3 assets increasing by ₹1,601 crore in Q2, including a ₹1,047 crore increase in the gold loan business due to short-tenor schemes discontinued in response to regulatory changes.
Following the rise in stage 2 assets, Bajaj Finance is changing its gold-loan strategy, with Jain stating that short-tenure loans requiring customers to visit branches every three months for repayment or rollover could inadvertently push them into delinquency. As reported by Mint, the company stopped offering such schemes in August and plans to focus on longer-tenure products, while allowing customers to continue with bullet repayment or opt for periodic interest payments. The company has significantly expanded its gold loan network, adding 320 branches during Q2 to reach 2,022 total branches, with plans to end the year with close to 2,800 standalone gold loan branches. Management emphasized that customers "need not have to come to branches again and again for rollover of the loans."
Bajaj Finance reported strong growth across multiple segments, with CV and tractor finance growing 89% and LAS growing 42% on a low base. According to Investing.com, MSME grew 3% and is expected to accelerate to double-digit growth momentum in the second half. The company is seeking to strengthen its balance sheet through a proposed ₹17,500 crore capital raise, comprising a ₹11,700 crore qualified institutional placement and ₹5,800 crore in preferential warrants from promoter Bajaj Finserv, subject to approvals. Management remains confident about the outlook, with Jain noting that "we should start to see, as we get into second half, a double-digit kind of growth momentum in the business."
