April 08, 2025

Bajaj Finance Ltd.: [ICRA]AAA (Stable) assigned to Rs. 15,000-crore NCD programme;
ratings reaffirmed
Summary of rating action

Previous rated amount Current rated amount

Instrument* Rating action
(Rs. crore) (Rs. crore)
Non-convertible debentures 95.00 95.00 [ICRA]AAA (Stable); reaffirmed

Non-convertible debentures 10,000.00 10,000.00 [ICRA]AAA (Stable); reaffirmed

Subordinated debt 290.00 290.00 [ICRA]AAA (Stable); reaffirmed

Fixed deposit - - [ICRA]AAA (Stable); reaffirmed

Non-convertible debentures - 15,000.00 [ICRA]AAA (Stable); assigned

Commercial paper 30,000.00 30,000.00 [ICRA]A1+; reaffirmed

Total 40,385.00 55,385.00

*Instrument details are provided in Annexure I

Rationale

The ratings factor in Bajaj Finance Ltd.’s (BFL) long track record of operations and established presence in the Indian financial
market as one of the largest retail-focused non-bank financiers. Over the last decade, the company has achieved significant
scale with consolidated assets under management (AUM) of Rs. 3,98,043 crore as on December 31, 2024 (Rs. 3,30,615 crore
as on March 31, 2024), distributed across different geographies and asset classes, lending granularity to its portfolio with a
predominantly retail-focused book. The ratings also consider BFL’s healthy earnings profile (3-year average [FY2022 to FY2024]
return on average managed assets (AMA) of 4.1%), driven by healthy margins and operating efficiency. Moreover, the asset
quality remains comfortable, resulting in low credit costs. BFL has built robust data analytics capabilities, facilitating early
warning signals and enabling the effective and continuous monitoring of the portfolio.

ICRA draws comfort from BFL’s strong capitalisation profile with a capital-to-risk weighted assets ratio (CRAR) of 21.6% as on
December 31, 2024 (Tier I CRAR of 20.8%), supported by healthy internal accretion. Further, it has continued to maintain a
superior liquidity profile with well-matched asset-liability maturities, supported by high on-balance sheet liquidity and
unutilised lines. ICRA also notes that BFL maintains a low share of funding from short-term sources. The company is of
significant strategic importance to the Bajaj Group, given its position as the lending vertical of Bajaj Finserv Limited. ICRA
expects BFL to continue benefitting from the financial flexibility derived from such association and relevance.

However, ICRA takes note of the moderate to high risk profile of the portfolio as unsecured consumer finance, personal loan
finance and small and medium enterprise (SME) finance accounted for ~48% of the consolidated portfolio as on December 31,
2024. BFL’s prudent risk management on account of tightened underwriting and its focus on existing customers mitigate the
asset quality risk to some extent. Given the company’s high growth plans, its ability to keep its asset quality under control will
remain a monitorable. Further, its ability to sustain a diversified funding mix and maintain a competitive cost of funds while
accelerating its growth over the medium term remains a monitorable.

The Stable outlook on the [ICRA]AAA rating reflects ICRA’s expectation that BFL will continue to benefit from its long track
record of operations, established branding, the scale and granularity of its portfolio, and its commitment to robust risk
management and prudent financial policies.

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 Key rating drivers and their description

Credit strengths

Strong market position and significant track record in Indian retail finance operations – BFL has a strong market presence in
the Indian non-bank retail financing sector. The company achieved fast-paced growth over the last decade to build a sizeable
portfolio of Rs. 3,98,043 crore as on December 31, 2024 (vs. Rs. 24,061 crore as on March 31, 2014) on a consolidated basis. It
is of significant strategic importance to the Bajaj Group, given its position as the lending vertical of Bajaj Finserv Limited. ICRA
expects BFL to continue enjoying financial flexibility, given its association and importance to the Bajaj Group. The company’s
stable and experienced senior management team has guided it through evolving technological disruptions and macroeconomic
challenges. ICRA expects BFL to continue leveraging the senior management’s expertise, going forward as well.

High share of retail portfolio and geographical and product diversification provide stability in a competitive environment –
As on December 31, 2024, the company had a presence in 4,259 locations across the country and a distribution network with
more than 2.0 lakh points of sale, catering to a total customer franchise of 9.7 crore borrowers. BFL predominantly focuses on
retail lending and has a reasonable presence across asset classes like mortgage, consumer durables, personal finance,
commercial finance, SME finance and rural finance with numerous product offerings in each segment. In addition to other
non-bank financiers, BFL’s competitive landscape in most high-volume segments, such as home loans and personal loans,
includes established private and public sector banks. ICRA expects that the company will remain diversified with a focus on its
retail portfolio and granularity, going forward as well.

Healthy earnings profile – With high portfolio growth over the last decade, the company benefitted from economies of scale
while maintaining good lending margins and controlling the credit costs. Consequently, BFL generated healthy internal accruals
that support the return indicators and facilitate growth as well. The consolidated credit costs increased to 1.8% in 9M FY2025
from 1.1% in FY2024 due to the higher delinquencies in the unsecured business segment and auto-finance loans and write-
offs. However, the improving operating efficiency has kept the overall profitability at a comfortable level. The company
reported a consolidated profit after tax (PAT) of Rs. 12,234 crore in 9M FY2025 (Rs. 10,622 crore in 9M FY2024). BFL reported
a PAT of Rs. 14,451 crore in FY2024, translating into a return of 4.3% on AMA and 22.1% on average net worth compared to
Rs. 11,508 crore, 4.5% and 23.5%, respectively, in FY2023. ICRA expects the long-term profitability to remain healthy.

Strong capitalisation profile – BFL was well-capitalised as on December 31, 2024 with a consolidated gearing of 3.6 times (3.8
times in March 2024; 4.0 times in March 2023) and a CRAR of 21.6% as on December 31, 2024 (Tier I CRAR of 20.8%), which
remains well above the regulatory requirement. ICRA expects the overall profitability to remain healthy, leading to low
incremental capital requirement for the next two years, assuming the credit cost does not significantly exceed the current
estimate. ICRA takes comfort from BFL’s demonstrated track record of raising capital in a timely manner (most recent capital
raise of ~Rs. 9,100 crore in November 2023) in order to consistently maintain a prudent gearing level.

Diversified funding profile – BFL has a diverse funding base with non-convertible debentures (NCDs) and subordinated debt
accounting for 38% of the overall consolidated borrowings as on December 31, 2024, followed by banks (29%), deposits (20%)
and other sources (13%) like external commercial borrowings, commercial paper (CP), collateralised borrowing and lending
obligation and securitisation. ICRA also notes that the company maintains a low share of funding from short-term sources. In
ICRA’s opinion, BFL has sufficient headroom, in terms of leveraging and tapping the deposit base as an incremental source,
apart from other avenues such as ECBs, direct assignment, etc., with further improvement in its scale over the medium to long
term.

Credit challenges

High share of relatively semi-secured/unsecured assets; asset quality remains monitorable – Unsecured consumer finance,
personal loan finance and SME finance accounted for ~48% of the consolidated portfolio as on December 31, 2024. Given the
significant share of relatively riskier (unsecured and difficult-to-repossess semi-secured) loans and the expected high growth

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 in its scale of operations, the company’s ability to maintain its asset quality indicators over economic cycles would be a key
monitorable. While ICRA notes the gradually increasing share of mortgage in BFL’s portfolio, the asset quality remains largely
untested for this business segment as a large part was disbursed in the last few years (FY2019-FY2024). Nevertheless, the
company’s use of data analytics and its continuous portfolio monitoring, based on microsegment-level system-generated early
warning signals, facilitate agility in terms of the pertinent credit policy adjustments required.

Environmental and social risks

Given the service-oriented business of BFL, its direct exposure to environmental risks/material physical climate risks is not
significant. Lending institutions can be exposed to environmental risks indirectly through their portfolio of assets, though such
risks are not material for BFL as its lending operations encompass a well-diversified portfolio of products. Nevertheless, there
is increasing interest from policymakers towards identifying the exposure of financing companies to carbon emissions through
their financing activities. This process is, however, in an early stage and ICRA expects any adverse implications to manifest only
over a longer time horizon, giving financing companies adequate time to adapt and minimise the credit implications. BFL has
started a carbon footprint assessment process across its business operations and is committed to take necessary measures to
identify and reduce its carbon footprint.

With regard to social risks, data security and customer privacy are among the key sources of vulnerability for lending
institutions as material lapses could be detrimental to their reputation and invite regulatory censure.

Liquidity position: Superior

As per BFL’s standalone liquidity statement as on December 31, 2024, there were no negative cumulative mismatches up to
five years, factoring in unutilised funding lines. The liquidity remained well supported by good on-balance sheet and off-
balance sheet buffers. The liquidity coverage ratio of 261%, for the quarter ended December 31, 2024 (260% for the quarter
ended March 31, 2024), was well above the regulatory requirement of 100%. The liquidity profile is supported by the diversified
funding profile and the demonstrated track record of regularly raising funds from diverse sources at competitive rates. BFL
had on-balance sheet liquidity (consolidated) of ~Rs. 13,656 crore as on December 31, 2024 (~Rs. 15,668 crore as on March
31, 2024).

Rating sensitivities

Positive factors – Not applicable

Negative factors – Pressure on the ratings could arise if the consolidated return on assets remains below 2% on a sustained
basis (assuming no significant change vis-à-vis the current consolidated portfolio mix) and the consolidated gearing remains
consistently above 7 times.

Analytical approach

Analytical approach Comments

Applicable rating methodologies Non-banking Finance Companies (NBFCs)
Parent/Group support Not applicable
Consolidation/Standalone Consolidated

About the company

Bajaj Finance Ltd. (BFL) is one of the largest retail asset financing non-banking financial companies (NBFCs) with a diversified
loan portfolio and a pan-India presence. While it was originally set up to provide finance for the purchase of two-wheelers and
three-wheelers manufactured by Bajaj Auto Limited, it diversified into other segments over the years. Currently, it operates

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 across seven broad categories – Consumer Lending, Commercial Lending, Rural Lending, SME Lending, Deposits, Payments and
Partnerships & Services.

Under Partnerships & Services, the company offers products like health insurance, extended warranties, comprehensive asset
care, co-branded credit cards and wallets. BFL offers a co-branded credit card with RBL Bank and DBS Bank. As on June 30,
2024, it had two subsidiaries – Bajaj Housing Finance Limited (BHFL) and Bajaj Financial Securities Limited (BFSL). BHFL is
registered with National Housing Bank as a housing finance company (HFC) while BFSL was incorporated to undertake the
business of share broking and to function as a depository participant.

Key financial indicators (audited)

9M
Bajaj Finance Ltd. (consolidated) FY2022 FY2023 FY2024
FY2025*
As per Ind-AS Ind-AS Ind-AS Ind-AS
Total income 30,755 40,301 54,983 51,256
Profit after tax 7,028 11,508 14,451 12,234
Total managed assets 2,22,940 2,84,705 3,85,101 NA
Return on average managed assets 3.5% 4.5% 4.3% NA
Gearing (gross; times) 3.8 4.0 3.8 NA
Gearing (managed; times) 4.0 4.2 3.9 NA
Gross stage 3 assets 1.6% 0.9% 0.8% 1.1%
Capital-to-risk weighted assets ratio (CRAR)^ 27.2% 25.0% 22.5% 21.6%
Total managed assets = Total assets + Impairment allowance + Direct assignment
Source: Company, ICRA Research; All ratios as per ICRA’s calculations; Amount in Rs. crore
^ CRAR is on standalone basis; *As per limited review financials

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

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 Rating history for past three years

Current (FY2026) Chronology of rating history for the past 3 years

FY2026
FY2025 FY2024 FY2023
Amount rated
Instruments Type Apr- 08-2025 Date Rating Date Rating Date Rating
(Rs. crore)
[ICRA]AAA May-07- [ICRA]AAA Jun-06- [ICRA]AAA Jun-07- [ICRA]AAA
Subordinated debt Long term 290.00
(Stable) 2024 (Stable) 2023 (Stable) 2022 (Stable)
Oct-25- [ICRA]AAA Oct-18- [ICRA]AAA Sep-23- [ICRA]AAA
2024 (Stable) 2023 (Stable) 2022 (Stable)
Short May-07- Jun-06- Jun-07-
Commercial paper 30,000.00 [ICRA]A1+ [ICRA]A1+ [ICRA]A1+ [ICRA]A1+
term 2024 2023 2022
Oct-25- Oct-18- Sep-23-
[ICRA]A1+ [ICRA]A1+ [ICRA]A1+
2024 2023 2022
[ICRA]AAA May-07- [ICRA]AAA Jun-06- [ICRA]AAA Jun-07- [ICRA]AAA
NCD programme Long term 10,095.00
(Stable) 2024 (Stable) 2023 (Stable) 2022 (Stable)
Oct-25- [ICRA]AAA Oct-18- [ICRA]AAA Sep-23- [ICRA]AAA
2024 (Stable) 2023 (Stable) 2022 (Stable)
[ICRA]AAA
NCD programme Long term 15,000.00 - - - - - -
(Stable)
[ICRA]AAA May-07- [ICRA]AAA Jun-06- [ICRA]AAA Jun-07- [ICRA]AAA
Fixed deposit Long term -
(Stable) 2024 (Stable) 2023 (Stable) 2022 (Stable)
Oct-25- [ICRA]AAA Oct-18- [ICRA]AAA Sep-23- [ICRA]AAA
2024 (Stable) 2023 (Stable) 2022 (Stable)

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 Complexity level of the rated instruments

Instrument Complexity indicator

Non-convertible debentures Simple
Subordinated debt Simple
Fixed deposit Very simple
Commercial paper Very simple

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated.
It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's
credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or
complexity related to the structural, transactional or legal aspects. Details on the complexity levels of the instruments are
available on ICRA’s website: Click here

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 Annexure I: Instrument details
Amount
Date of Current rating and
ISIN Instrument name Coupon rate Maturity rated
issuance outlook
(Rs. crore)
Not issued yet NCD programme NA NA NA 10,000.00 [ICRA]AAA (Stable)
Not issued yet NCD programme NA NA NA 15,000.00 [ICRA]AAA (Stable)
INE296A07HW2 NCD programme Aug-20-15 8.90% Aug-20-25 90.00 [ICRA]AAA (Stable)
INE296A07IA6 NCD programme Oct-13-15 8.70% Oct-13-25 5.00 [ICRA]AAA (Stable)
INE296A08755 Subordinated debt Oct-21-15 8.94% Oct-21-25 40.00 [ICRA]AAA (Stable)
INE296A08763 Subordinated debt Nov-09-15 8.94% Nov-07-25 250.00 [ICRA]AAA (Stable)
INE296A14XX3 CP programme Apr-19-24 7.95% Apr-17-25 500.00 [ICRA]A1+
INE296A14XY1 CP programme Apr-22-24 7.95% Apr-22-25 390.00 [ICRA]A1+
INE296A14XZ8 CP programme Apr-23-24 7.95% Apr-23-25 100.00 [ICRA]A1+
INE296A14YJ0 CP programme Jun-13-24 7.90% Jun-13-25 100.00 [ICRA]A1+
INE296A14YM4 CP programme Jun-24-24 7.90% Jun-24-25 50.00 [ICRA]A1+
INE296A14YO0 CP programme Jul-03-24 7.87% Jul-03-25 100.00 [ICRA]A1+
INE296A14YP7 CP programme Jul-08-24 7.87% Jul-08-25 75.00 [ICRA]A1+
INE296A14YQ5 CP programme Jul-15-24 7.91% Jul-15-25 950.00 [ICRA]A1+
INE296A14YR3 CP programme Jul-16-24 7.91% Jul-16-25 1,150.00 [ICRA]A1+
INE296A14YS1 CP programme Jul-18-24 7.91% Jul-18-25 525.00 [ICRA]A1+
INE296A14ZD0 CP programme Nov-18-24 7.70% Nov-18-25 2,125.00 [ICRA]A1+
INE296A14ZE8 CP programme Nov-19-24 7.70% Nov-19-25 60.00 [ICRA]A1+
INE296A14ZG3 CP programme Nov-21-24 7.70% Nov-21-25 50.00 [ICRA]A1+
INE296A14ZI9 CP programme Jan-15-25 7.90% Apr-16-25 1,525.00 [ICRA]A1+
INE296A14XX3 CP programme Jan-16-25 7.90% Apr-17-25 800.00 [ICRA]A1+
INE296A14ZK5 CP programme Jan-20-25 7.90% Apr-21-25 950.00 [ICRA]A1+
INE296A14XZ8 CP programme Jan-22-25 7.90% Apr-23-25 350.00 [ICRA]A1+
INE296A14ZJ7 CP programme Jan-23-25 7.90% Apr-24-25 900.00 [ICRA]A1+
INE296A14ZL3 CP programme Jan-24-25 7.90% Apr-24-25 425.00 [ICRA]A1+
INE296A14ZM1 CP programme Jan-24-25 7.90% Apr-28-25 350.00 [ICRA]A1+
INE296A14ZN9 CP programme Jan-24-25 7.90% Apr-29-25 225.00 [ICRA]A1+
INE296A14ZP4 CP programme Feb-14-25 7.77% May-16-25 1,275.00 [ICRA]A1+
INE296A14ZO7 CP programme Feb-17-25 7.72% May-19-25 450.00 [ICRA]A1+
INE296A14ZQ2 CP programme Feb-20-25 7.77% May-22-25 2,350.00 [ICRA]A1+
INE296A14ZR0 CP programme Feb-21-25 7.77% May-23-25 925.00 [ICRA]A1+
INE296A14ZS8 CP programme Feb-24-25 7.77% May-26-25 750.00 [ICRA]A1+
INE296A14ZT6 CP programme Feb-25-25 7.77% May-27-25 250.00 [ICRA]A1+
INE296A14ZU4 CP programme Mar-5-25 7.78% Jun-4-25 275.00 [ICRA]A1+
INE296A14ZW0 CP programme Mar-7-25 7.78% Jun-6-25 250.00 [ICRA]A1+
INE296A14ZU4 CP programme Mar-7-25 7.78% Jun-4-25 200.00 [ICRA]A1+
INE296A14ZV2 CP programme Mar-10-25 7.78% Jun-9-25 350.00 [ICRA]A1+
INE296A14ZY6 CP programme Mar-11-25 7.80% Jun-10-25 500.00 [ICRA]A1+

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 Amount
Date of Current rating and
ISIN Instrument name Coupon rate Maturity rated
issuance outlook
(Rs. crore)
INE296A14ZZ3 CP programme Mar-12-25 7.85% Jun-11-25 1,925.00 [ICRA]A1+
INE296A14ZX8 CP programme Mar-13-25 7.78% Jun-12-25 300.00 [ICRA]A1+
INE296A14A08 CP programme Mar-17-25 7.85% Jun-16-25 200.00 [ICRA]A1+
Yet to be issued CP programme NA NA 7-365 days 8,300.00 [ICRA]A1+
NA Fixed deposit programme NA NA NA NA [ICRA]AAA (Stable)
Source: Company, ICRA Research

Annexure II: List of entities considered for consolidated analysis

Company name BFL’s ownership (December 31, 2024) Consolidation approach

Bajaj Housing Finance Limited 88.75% Full consolidation
Bajaj Financial Securities Limited 100.00% Full consolidation
Note: ICRA has taken a consolidated view of the parent (BFL) and its subsidiaries/associates while assigning the ratings

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 ANALYST CONTACTS
Karthik Srinivasan A M Karthik
+91 22 6114 3444 +91 44 4596 4308
[email protected] [email protected]

Prateek Mittal Arpit Agarwal

+91 33 6521 6812 +91 124 4545 873
[email protected] [email protected]

Anubhav Khatri
+91 124 4545 846
[email protected]

RELATIONSHIP CONTACT
L. Shivakumar
+91 22 6114 3406
[email protected]

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
Tel: +91 124 4545 860
[email protected]

HELPLINE FOR BUSINESS QUERIES

+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)

[email protected]

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