Bajaj Finance continues to step up checks on people with multiple unsecured loans, says Rajeev Jain

Mumbai: Data shows customers with multiple unsecured loans are more likely to default, Bajaj Finance managing director Rajeev Jain said on Tuesday as the company continues to tighten underwriting norms for a group of customers.

“When we looked at portfolio movements across secured and unsecured portfolios, one thing that stood out was that clients with more than three or more current unsecured loans showed a higher propensity to default and a lower collection efficiency Lower,” Jain told analysts after the meeting. Publishes the lender’s September quarter financials. “As we look at the data, we will continue to tighten underwriting specifications for this customer group for all of these products in a sensible manner.”

Although bank unsecured loan growth has slowed, default rates are starting to rise in some areas. Customers are delaying payments on credit cards and personal loans, causing delinquency rates to rise after months of a binge on small consumer loans, Mint Reported on September 25. Data from credit bureau TransUnion Cibil showed that the amount owed on credit cards with repayments more than 90 days late rose 17 basis points (bps) year-on-year to 1.8% in June.

quarterly results

Bajaj Finance’s asset quality deteriorated in the September quarter. Its consolidated gross non-performing assets (NPA) and net non-performing assets were 1.06% and 0.46% respectively as on September 30, compared with 0.91% and 0.31% in the same period last year. Loan losses and provisions increased 77% year-on-year $1909 Crores.

“On a consolidated basis, I would say it was a mixed quarter for our company. It was a good quarter in terms of volume, assets under management and operational efficiency. As with the first quarter, it was a good quarter. Loan losses remained high in the second quarter and hence profit growth and return on assets were lower during the quarter,” Jain said.

Jain added that while Bajaj Finance performed well in terms of AUM, NIM and overhead, credit cost was a dampener in the quarter. “It spans all retail and SME business areas and is not limited to any one segment or geography. As a prudent company, we will continue to take risk actions.”

Meanwhile, the cost of funds in the September quarter was 7.97%, an increase of 3 basis points from the first quarter of fiscal 2025. Jain said the company’s capital costs have peaked. Bajaj Finance second quarter deposit book grows 21% year-on-year $Deposits accounted for 20% of consolidated borrowings as on September 30 at Rs 66,131 crore.

“Deposit account growth has slowed down significantly given that there is a lot of price war going on across the system and the company has found other alternative sources that are more attractive in terms of coupons,” Jain said.