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Tag: Bajaj Finance

  • Top NBFCs seek RBI nod to raise retail deposits

    MUMBAI: Large non-banking finance companies (NBFCs) have urged the central bank to allow them to raise deposits from retail investors-a move they say would create a level playing field among finance companies and improve transmission of policy rates, people familiar with the matter told ET.

    This request was conveyed by select finance companies to the Reserve Bank of India (RBI) governor Sanjay Malhotra, during a closed-door meeting held on Monday.

    Except for a few NBFCs with legacy licences, most NBFCs are barred from raising retail deposits. Bajaj Finance, Shriram Finance, and Mahindra Finance are among the few NBFCs that are permitted to accept retail deposits. The governor met the CEOs of NBFCs, housing finance companies, microfinance institutions, and industry representatives on Monday.

    To be sure, the RBI has long resisted demands from well-rated NBFCs to be allowed to garner retail deposits, something that is the funding mainstay for banks.

    “The critical issue here is that bank deposits, up to Rs 5 lakh, are insured by DICGC or Deposit Insurance and Credit Guarantee Corporation, unlike NBFC deposits. That is one of the concerns preventing the regulator from issuing new deposit-taking licences to finance companies,” said an economist, who declined to be named. “The regulator would always err on the side of caution.”

    NBFCs that are allowed to raise deposits face strict limits. Retail deposits can’t exceed 1.5 times their net owned funds. The term deposits must have tenures ranging from 12 to 60 months, and interest rates are capped at 12.5% per annum.

    As of March 2025, retail deposits accounted for about 12.5% of resources deposits raised by NBFCs-D, the RBI said in its annual Trend and Progress report. The report noted that five major NBFC-Ds account for 96.9% of aggregate deposits.

    Speaking to ET, Jairam Sridharan, MD of Piramal Finance, hinted that while NBFCs seek a stable liability structure, few aspire for a banking licence that would allow retail deposit mobilisation.

    “Few NBFCs have the skills to do deposit management. It’s a very different ballgame than giving customers your money. Asking customers for their money requires trust and a certain level of fiduciary abilities internally in governance architectures. Maybe there are 10 or 12 NBFCs which have anything close to that kind of ability, the remaining 9,500 probably don’t have it,” Sridharan said in an interview on November 6, 2025.

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  • Bajaj Finance, Shriram Finance follow banks, hike FD rates

    Bajaj Finance, Shriram Finance follow banks, hike FD rates

    Two leading NBFCs -Bajaj Finance and Shriram Finance -have hiked rates on term deposits following a slew of deposit rate hikes by banks in Q4 FY24.

    While traditionally NBFCs offer higher deposit rates than banks, intensified competition for deposit accretion has forced NBFCs to compete with smaller private banks and small finance banks which have turned more aggressive on rates.

    Currently, medium and small private banks are offering FD rates up to 8.5 per cent for regular citizens and up to 9.0 per cent for senior citizens, whereas small finance banks are giving interest of up to 9.25 per cent.

    Bajaj Finance has increased FD rates for most tenures by up to 60 bps, effective April 3. FD rates have been hiked by up to 45 bps for deposits with a tenure of 25-35-months, by 40 bps for 18 and 22-month deposits, and by 35 bps for FDs with a tenure of 30 and 33 months.

    For senior citizens FD rates have been hiked by up to 60 bps in the 25-35-month tenure and by 40 bps in the 18-24-month tenure. 

    “Senior citizens can continue to avail FD rates of up to 8.85 perc ent and non-senior citizens can take benefit of rates of up to 8.60 per cent by booking digitally in the 42-month tenure,” the company said in a release.

    Another NBFC Shriram Finance has raised FD rates by 5-20 bps across deposits maturing in 12 to 60 months. The rates effective April 9 go up to maturities that range between 12 and 60 months, effective April 9.

    Deposits between 12 and 36 months will earn up to 7.85 per cent whereas those between 36 and 60 months will earn up to 8.8 per cent interest. Further, an additional 50 bps is being offered to senior citizens and 10 bps to women depositors. Effectively, senior citizen women investors can earn up to 9.4 per cent interest.

    Fund raise

    Like banks, NBFCs too are struggling to raise funds to support the sustained pace of credit growth. In addition to increased competition from banks for deposits, NBFCs have also seen normalisation in bank credit lines due to repeated warnings by the central bank on increasing inter-connectedness between the two sectors, making deposit accretion even more crucial.

    While banks have been hiking rates through H2 FY24 on various maturity buckets, NBFCs have less flexibility in changing deposit rates. Further, a lot of these lenders were also waiting for the end of the quarter and the financial year to protect their margins for the reported period, analysts said.

    Deposit growth for most private banks accelerated during Q4 to 14-26 per cent. Sequential deposit growth too was higher at 4-15 per cent compared with 2-8 per cent in the previous quarter, as per provisional numbers declared by banks. Small finance banks saw high growth of 24-50 per cent.

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  • Lenders flag rising delinquencies in small ticket unsecured retail loans post RBI caution

    Lenders flag rising delinquencies in small ticket unsecured retail loans post RBI caution

    A fortnight after RBI cautioned banks against unprecedented growth in unsecured retail loans and asked them to grow “sensibly”, large banks and NBFCs have flagged increased risks and delinquencies in some small-ticket segments.

    As a part of Q2 earnings, ICICI Bank highlighted that market trends and research indicate risk build up and higher defaults in lower ticket loans, especially below ₹50,000 where affordability and repayment ability are constraints.

    Kotak Bank too acknowledged headwinds and higher delinquencies in certain unsecured segments, especially smaller ticket loans, but interim MD Dipak Gupta said the risk-adjusted returns are still “okay”.

    Lenders are continuously monitoring these portfolios and haven’t reached a point of putting the brakes or panicking, he said, adding that while the rate of default is higher than last year, it continues to be below pre-Covid levels.

    Bajaj Finance, the largest retail NBFC, said leverage levels have worsened for the below ₹50,000 ticket portfolio and the company has cut exposure to borrowers with multiple lines of credit of less than ₹50,000 as it reflects imprudence.

    Personal loans up

    Personal loans, including credit cards, grew to 10.7 crore in FY23 from 7 crore in FY22 and 4.5 crore in FY20, led by the less than ₹50,000 and above ₹8 lakh segments, as per an internal analysis by Bajaj Finance. Industry AUM for the segment rose to ₹13.5-lakh crore in FY23 from ₹7.5-lakh crore in FY20.

    Unsecured retail loans accounted for a significant portion of lenders’ fresh slippages in Q2 FY24, however most lenders dismissed any marked concerns given the smaller share of these loans in the total book and the steady rate of collections and recoveries.

    A recent SBI report said unsecured retail loans comprise one-tenth of banks total loans, indicating contained risk at the time. Small-ticket personal loans of below ₹50,000 comprised 2 per cent of banks’ overall personal loans and 0.3 per cent of retail loans as of FY23, according to CIBIL CMI data.

    Corrective action

    Bajaj Finance has reduced exposure to urban unsecured retail loans by 8 per cent and rural loans by 14 per cent. MD Rajeev Jain said the rural B2C segment looked the most vulnerable at the moment and was the only segment where the lender has taken “corrective action” based on the bounce and slippage rates and portfolio efficiency.

    While Kotak Bank will continue its policy of completely providing for unsecured retail loans that are 180 dpd (days past due), RBL Bank said it has accelerated risk mitigation by fully providing for such loans at 120 dpd. This led to the bank providing an ₹48 crore more, in addition to which it also made contingent provisions of ₹252 crore on its microfinance and credit card portfolios.

    Yes Bank said it has strengthened underwriting and is strategically going slower in certain retail segments such as unsecured loans, given the increasing trend of delinquencies, especially in the 30 dpd segment.

    In the October policy, RBI had asked lenders to strengthen their internal risk mechanisms as the “first line of defence” to avoid any future challenges, adding that robust risk management and stronger underwriting standards are the “need of the hour”.

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  • NBFCs maintain growth in Q1, wary of rising unsecured retail leverage

    NBFCs maintain growth in Q1, wary of rising unsecured retail leverage

    Non-banking financial companies (NBFCs) maintained their growth momentum in Q1 FY24 led by strong demand for retail, especially unsecured, loans and a pick-up in the rural and semi-urban economy.

    Most major diversified lenders continued to post record retail disbursements in Q1 on the back of broad-based growth across segments such as housing, vehicle, SME, microfinance, gold and personal loans. Industry leader Bajaj Finance said that the growth in personal loans is across the industry and is being driven by increased penetration in tier-2 and tier-3 cities from where demand continues to rise.

    Growth is also being led by increased adoption of digital channels for distribution, which have been seeing an increase in their contribution to overall customer sourcing and revenue income, industry players said.

    Rural-focussed players such as M&M Financial Services, Shriram Finance and Satin Creditcare benefitted from the pick-up in the semi-urban and rural economy, which continues to lag demand from metros and urban locations. Here, used vehicle and home improvement loans were a significant contributor to incremental growth amid rising prices for new vehicles and housing.

    For housing finance companies, loan demand was led by the affluent and premium housing segment whereas affordable housing had a weak quarter, largely owing to the recent surge in real estate prices over the last 2-3 quarters. However, here too rural-focussed HFCs saw improving affordable home loans trends, with demand from tier-3 and tier-4 cities increasing led by economic recovery and stabilisation in rural cash flows following pandemic-linked disruptions.

    Bajaj Finance, L&T Finance and Poonawalla Fincorp are brokerages top picks amongst NBFCs that have declared their Q1 results so far.

    Margins, asset quality

    While credit growth trends were optimistic, most NBFCs saw flat margins or some amount of margin compression due to increase in their cost of borrowing. Even for deposit-taking NBFCs, cost of funds were higher on the back of deposit repricing and increased competition for deposits from banks.

    Lenders expect NIM compression to continue for at least another two quarters, with Bajaj Finance guiding for another 10-15 bps compression each in Q2 and Q3 of FY24. Mahindra Finance, IIFL Finance and other mid-sized NBFCs too have guided for an increase in their borrowing cost over the coming quarters.

    Despite stable to better asset quality for most NBFCs, provisioning requirements for these lenders increased during the quarter as they looked to boost ECL (expected credit loss) provisions and build buffers against rising leverage in the unsecured retail loan segment.

    Bajaj Finance flaggged that the pace and quantum of growth in personal loans is “troubling”, saying that the company is monitoring different aspects such as the amount of leverage, tenure and which segments are more at risk. It added that the approval rates for urban segments is about 19-20 per cent and even tighter for rural loans.

    The growth outlook for NBFCs remains strong with ICRA recently pegging it at 18-20 per cent led by 26-28 per cent growth in unsecured loans. Going ahead, NBFCs’ ability to manage the rising leverage and risks emanating from it even as try to balance their cost of funds and margins, will be the key monitorable for future earnings trajectory, analysts said.

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  • Bajaj Finance may spin off its payments business into separate subsidiary

    Bajaj Finance may spin off its payments business into separate subsidiary

    Bajaj Finance is looking to spin off its payments vertical as a separate subsidiary, while in the next 3-5 years it is also expecting to meaningfully scale up platforms and apps launched in the past 4-5 years.

    The non-banking finance company manages around half of all consumer loans in India in volume terms and has significant shares in loan volumes for the purchase of electronic items and iPhones.

    Its mortgage book saw a growth of 26 per cent in the March quarter and constituted 28 per cent of its total assets under management, which was at ₹2.47 lakh crore at the end of March. Its payments business is still in the nascent stages and is being scaled up.

    In a recent interaction at Jefferies India Forum, Bajaj Finance’s Chief Executive Officer Rajeev Jain indicated that the company is looking at a 4-5 per cent share in retail loans and a 3 per cent share in the payment segment.

    Also read: Bajaj Finance plans entry into microfinance segment by 2025, says Sanjiv Bajaj

    New loan verticals

    To make this happen the company is foraying into segments such as loans for automobiles, tractors, commercial vehicles, microfinance institutions, and emerging corporates. These are market segments with a potential combined opportunity of ₹13 lakh crore and they constitute roughly 28 per cent of retail credit in India. These are the new loan verticals that the company is expecting to drive growth in the medium to long term.

    With a view to pushing its loan products, the company had launched a number of applications and platforms while also strengthening its branch network, all with a long-term horizon that will soon be paying off. The company’s strategy with its digital loan platforms has been to enhance its engagement with its existing customer base, rather than relying only on new customers. The app already has over 3.5 crore users with a significant download velocity. The improvement in operating efficiencies from this is expected to compensate for some compression in the net interest margins in the current year.

    With its loan products, the company intends to strike a balance between secured and unsecured credit, those that are profit-maximisers and scale builders and new segments versus those that are part of its existing portfolio.

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  • Bajaj Finance Q4 PAT up 25% on strong AUM, NII growth

    Bajaj Finance Q4 PAT up 25% on strong AUM, NII growth

    Bajaj Finance posted a net profit of ₹2,837 crore for Q4 FY23, up 25 per cent YoY led by strong growth in net interest income (NII) to Rs 7,104 crore — also higher by 25 per cent.

    For FY23, the retail NBFC posted a 62 per cent rise in the profit after tax to ₹10,290 crore led by 30 per cent NII growth to ₹26,401 crore. AUM was up 28 per cent YoY at ₹1.8-lakh crore, and the company held management and macro-economic overlay of ₹723 crore as of March 31.

    growth areas

    In the post earnings investor call, MD Rajeev Jain said 11 verticals of the advances saw strong growth. The product mix has remained largely steady from the previous year and is not expected to change significantly going forward, he said, adding that the NBFC will be able to grow comfortable while maintaining this mix.

    Pegging AUM growth at 20 per cent, Jain said the company should be able to dispense about 350 lakh loans in FY24.

    While retail growth is strong in line with the industry, Bajaj Finance is cautious on unsecured assets, where it has a market share of 7-8 per cent, as unsecured personal loans are “basically a risk business and a not balance sheet business”, he said.

    While on a net basis there no impact on NIM (net interest margins) in FY23, there will be gradual moderation in margins in FY24, Jain said, pegging the NIM impact for FY24 40-50 bps assuming one more rate hike by the RBI.

    “Part of it will get mitigated, if we take an overall P&L view, by peaking of opex metrics, best ever credit metrics, will partially mitigate that as well. So it should overall have a low impact on the RoA and RoE profile,” Jain said.

    Housing arm

    Wholly-owned subsidiary Bajaj Housing’s AUM grew 30 per cent YoY to ₹69,228 crore, with developer finance seeing the highest growth at 92 per cent. The vertical, which currently comprises 9 per cent of the portfolio, will rise and stabilise at 12-14 per cent as per industry standards, Jain said.

    He added that while there is some normalisation in growth, demand in the luxury and medium segment remains strong and the small size of the book gives the company sufficient headroom to grow even if there is some slowdown.

    Bajaj Finance disbursed 296 lakh loans in in FY23, adding a record 116 lakh new customers, of which 31 lakh customers were added in Q4.

    The surge in customer acquisition in Q4 was led by more capacity planning by the company in the last 120 days as business conditions picked up. This includes increasing the staff at stores and management level over the last 60-75 days, which has shown significant results.

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  • Weekly Market Wrap: Nifty, Sensex posted gains in 2nd straight week as US GDP growth eases recession fears

    Weekly Market Wrap: Nifty, Sensex posted gains in 2nd straight week as US GDP growth eases recession fears

    The BSE Sensex gained 652.70 points, or 1.1 per cent, at 59,959.85 during the week ended October 28, 2022, while the Nifty inclined 210.5 points, or 1.2 per cent to 17,786.80. Market participants got some encouragement as US GDP growth of 2.6 per cent in the third quarter and falling crude oil prices eases recession fear. Also, a report from a private rating agency states that the Indian economy’s recovery from the coronavirus pandemic, as well as the pace of the economy is better as compared to global peers despite headwinds such as high inflation, monetary policy tightening, rising interest rate, and the Russia-Ukraine war.

    Market veteran Vinod Nair, Head of Research at Geojit Financial Services, said: “The domestic market remained flat with a positive bias during the week as favourable domestic cues were countered by mixed global mood. The US GDP grew by 2.6 per cent during the quarter that ended in September. However, it failed to lift the market as US tech stocks saw a significant sell-off following disappointing quarterly results and a bleak forecast. The ECB raised interest rates by 75 basis points, also signalling that it is making progress in combating record inflation, though the plausibility of a recession grew.”

    “The expectation that the central banks would slow down the pace of rate hikes from the beginning of CY23 gave comfort to the global markets. As a result, bond yields across the globe softened, with the US 10yr yield diving below 4 per cent. The strengthening rupee, along with a softening treasury yield and decent Q2 earnings results, will support the domestic market in the near term”, he added.

    As many as 40 stocks in the Nifty 50 index delivered a positive return to investors in the passing week. With a gain of (9.1 per cent), Maruti Suzuki India emerged as the top gainer in the index. It was followed by JSW Steel (up 7.8 per cent), NTPC (up 5.5 per cent), Larsen & Toubro (up 5.3 per cent), and Power Grid Corporation of India (up 4.5 per cent).

    Mahindra & Mahindra, Apollo Hospitals Enterprise and Shree Cement also advanced by over 4 per cent. On the other hand, Hindustan Unilever, Bajaj Finance, and HDFC Life Insurance Co declined 4.9 per cent, 2.5 per cent and 2.2 per cent, respectively.

    Sector-wise, the BSE Auto index gained 3.9 per cent during the week gone by. BSE Oil & Gas index has also given a 3.3 per cent return. While BSE Capital Goods, BSE Metal, BSE Power and BSE Realty indices also surged more than 2 per cent. In contrast, the BSE Fast Moving Consumer Goods index has declined by 1.0 per cent.

    Market watcher Rupak De, Senior Technical Analyst at LKP Securities, said: “Nifty remained volatile during the day before closing on a muted note. The consolidation continued as the index failed to give any directional move. On the daily timeframe, the index has sustained above the crucial moving average, confirming the short-term uptrend. Over the short term, the trend may remain sideways to positive. On the lower end, support is visible at 17,700/17,550; resistance on the higher end is placed at 17,850/17,950”.

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