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-focussed non-bank financiers. Over the last decade, the company has achieved significant scale with consolidated assets under management (AUM) of Rs. 4,84,477 crore as on December 31, 2025 (Rs. 4,16,661 crore as on March 31, 2025), spread across different geographies and asset classes, lending granularity to its portfolio. It has a predominantly retail-focussed book with comfortable asset quality. BFL has built robust data analytics capabilities and facilitated early warning signals, enabling the effective and continuous monitoring of the portfolio. The ratings also consider the strong capitalisation profile with a capital-to-risk weighted assets ratio (CRAR) of 21.5% as on December 31, 2025 (Tier I CRAR of 20.6%), supported by healthy internal accretion. The company’s earnings profile remains comfortable (5-year average [FY2021 to FY2025] return on average managed assets (AMA) of 3.7%), driven by healthy margins and operating efficiency. 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 its association with the Bajaj Group. 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 ~46% of the consolidated portfolio as on December 31, 2025. Given the relatively higher delinquencies in the unsecured business segment and auto finance loans, BFL’s gross nonperforming assets increased to 1.2% as on December 31, 2025 from 1.0% as on March 31, 2025 (0.85% as on March 31, 2024). Nevertheless, the overall asset quality remains comfortable. 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 scale and high growth plans, its ability to keep its asset quality under control will remain monitorable. The Stable outlook on the [ICRA]AAA rating reflects ICRA’s expectation that BFL will continue to benefit from its track record of operations and its healthy earnings and capitalisation profile.

ICRA has simultaneously reaffirmed and withdrawn the rating for the Rs. 95-crore non-convertible debentures and Rs. 290- crore subordinated debt as instruments have been redeemed with no amount outstanding against the same. This is in accordance with ICRA’s policy on the withdrawal of credit rating.