4.8 Provisions, contingent liabilities and Commitment
The Company recognises a provision when there is present obligation as a result of a past event
that probably requires an outflow of resources and a reliable estimate can be made of the amount of
the obligation.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. The Company also discloses present obligations
for which a reliable estimate cannot be made as a contingent liability. When there is a possible obligation
or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Commitments are future liabilities, which include undrawn loan commitments, estimated amount of
contracts remaining to be executed on capital account and not provided for.
4.9 Retirement and other employee benefits
(a) Short term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for
the services rendered by employees are recognised during the year when the employees render
the service. These benefits include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in which the employee renders the
related service. The liability for accumulated leaves which is eligible for encashment within the same
calendar year is provided for at prevailing salary rate for the entire unavailed leave balance as at the
Balance Sheet date.
(b) Employment benefit plans
The Company operates defined contribution, defined benefit and other long term service benefits.
Payment to defined contribution plans i.e. provident fund and employees' state insurance are charged
as an expenses as the employee render service.
Defined benefit plans for gratuity is funded by the Company. Payment for present liability of future
payment of gratuity is made to the approved gratuity fund viz. Bajaj Auto Limited Gratuity Fund
Trust, which covers the same under cash accumulation policy and debt fund of the Life Insurance
Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Limited (BALIC). However, any
deficits in plan assets managed by LIC and BALIC as compared to actuarial liability determined by an
appointed actuary are recognised as a liability. Actuarial liability is computed using the projected unit
credit method. The calculation includes assumptions with regard to discount rate, salary escalation
rate, attrition rate and mortality rate. Management determines these assumptions in consultation
with the plan's actuaries and past trend. Gains and losses through remeasurements of the net defined
benefit liability/assets are recognised immediately in the Balance Sheet with a corresponding debit or
credit to retained earnings through OCI in the period in which they occur. The effect of any planned
amendments are recognised in Statement of Profit and Loss. Remeasurements are not reclassified to
profit or loss in subsequent periods.
(c) Share based payments
The Company enters into equity settled share-based payment arrangement with its employees
as compensation for the provision of their services. The cost is determined basis the fair value of
the employee stock options on the grant date using the Black Scholes model. The total cost of the
share option is accounted for on a straight-line basis over the vesting period of the grant. The cost
attributable to the services rendered by the employees of the Company is recognised as employee
benefits expenses in the Statement of Profit or Loss, together with a corresponding increase in Share
Options Outstanding Account in other equity.
The Holding Company and Ultimate Holding Company had granted stock options to our employees in
earlier financial years for provision of services to our Company. The total cost determined basis fair
value using Black Scholes model is charged on a straight-line basis over the vesting period of the grant
and is recognised as employee benefits expenses in the Statement of Profit or Loss.
4.10 Fair value measurement
The Company measures its qualifying financial instruments at fair value on each Balance Sheet date.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data is available to measure fair value, maximising the use of relevant observable inputs and minimising the
use of unobservable inputs.
In case financial instruments are classified on the basis of valuation techniques that features one or more
significant market inputs that are unobservable, then measurement of fair value becomes more judgemental.
Details on level 3 financial instruments along with sensitivity and assumptions are set out in note no. 49.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy into Level I, Level II and Level III based on the lowest level input
that is significant to the fair value measurement as a whole. For a detailed information on the fair value
hierarchy, refer note no. 48 and 49.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
4.11 Collateral repossession
The nature of products across these broad product categories are either unsecured or secured by
collateral. Although collateral is an important risk mitigant of credit risk, the Company's practice is to
lend on the basis of assessment of the customer's ability to repay rather than placing primary reliance
on collateral. Based on the nature of product and the Company's assessment of the customer's credit
risk, a loan may be offered with suitable collateral. Depending on its form, collateral can have a significant
financial effect in mitigating the Company's credit risk.
The Company periodically monitors the market value of collateral and evaluates its exposure and loan to
value metrics for high risk customers. The Company exercises its rights of repossession across all secured
products. It also resorts to invoking its right under the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and other judicial remedies available
against its mortgages and commercial lending business. The repossessed assets are either sold through
auction or released to delinquent customers in case they come forward to settle their dues.
4.12 Recent accounting pronouncements
Ministry of Corporate Affairs ('MCA') notifies new standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended
31 March 2025, MCA has not notified any new standards or amendments to the existing standards
applicable to the Company.
*All the Privately placed secured redeemable non-convertible debentures of the Company including those issued during the year ended 31 March 2025
are fully secured by hypothecation of book debts/loan receivables to the extent as stated in the respective information memorandum. Further, the
Company has, at all times, for the non-convertible debentures, maintained asset cover as stated in the respective information memorandum which is
sufficient to discharge the principal amount, interest accrued thereon and such other sums as mentioned therein.
The quarterly statements or returns of assets filed by the Company with banks, financials institutions and debenture trustees are in agreement
with books of accounts. The amount reported in quarterly statements is adjusted for net stage 3 loan balances, interest accrued but not due and
loans to related parties as required by banks, financial institutions and debenture trustees.
The Company has no pending charges or satisfaction which are required to be registered with ROC.
As a part of Interest rate risk management, the Company has entered into INR interest rate swaps of a notional amount of H 500 crore during the
year ended 31 March 2025 (Previous year H 1,750 crore). The total outstanding as on 31 March 2025 is H 2,350 crore (Previous year H 1,850 crore).
The Company has not been declared a wilful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or
consortium thereof in accordance with the guidelines on wilful defaulters issued by the RBI.
‘Nature of security for term loans taken from Banks
Secured against hypothecation of book debts, loan receivables and other receivables.
The quarterly statements or returns of assets filed by the Company with banks, financials institutions and debenture trustees are in
agreement with books of accounts. The amount reported in quarterly statements is adjusted for net stage 3 loan balances, interest accrued
but not due and loans to related parties as required by banks, financial institutions and debenture trustees.
$Nature of security for term loans taken from NHB
(i) All the outstanding refinancing from NHB are secured by hypothecation of specific loans/ book debts to the extent of 1.05 and 1.10
times of outstanding amount as per respective sanctioned terms.
(ii) The Company has availed refinance facility from NHB of H 2,893.75 crore during the year ended 31 March 2025 (Previous year
H 5,499.38 crore) against eligible individual Housing loans under various refinance schemes including Affordable Housing Scheme.
The Company has no pending charges or satisfaction which are required to be registered with ROC.
Nature and purpose of other equity
i. Securities premium
Securities premium is used to record the premium on issue of shares. The premium received during the
year represents the premium received towards allotment of shares. It can be utilised only for limited
purposes in accordance with the provisions of the Companies Act, 2013.
ii. Statutory reserve in terms of Section 29C of the National Housing Bank Act, 1987
Reserve fund is created as per the Section 29C of the National Housing Bank Act, 1987, which requires every
housing finance company to create a reserve fund and transfer therein a sum not less than twenty percent
of its net profit every year as disclosed in the profit and loss account and before any dividend is declared. The
Company has transferred twenty percent of it's net profit during the year to the reserve fund. This includes
Special Reserve created to avail the deduction as per the provisions of Section 36(1) (viii) of the Income Tax
Act, 1961 on profits derived from the business of providing long-term finance for construction or purchase of
houses in India for residential purposes.
iii. Retained earnings
Retained earnings represents the surplus in profit and loss account after appropriation.
The Company recognises change on account of remeasurement of the net defined benefit liability (asset)
as part of retained earnings with separate disclosure, which comprises of:
(a) actuarial gains and losses and
(b) return on plan assets, excluding amounts included in net interest on the net defined benefit liability/
(asset).
43. Disclosure of transactions with related parties as required by Ind AS 24 (Contd.)
Notes
• Transactions values (TV) are excluding taxes and duties.
• Amount in bracket denotes credit balance.
• Transactions where Company act as intermediary and passed through Company's books of accounts are not in the nature of related
party transaction and hence are not disclosed.
• Insurance claims received by the Company on insurance cover taken by it on its assets are not in the nature of related party transaction,
hence not disclosed.
• The above disclosures have been made for related parties identified as such only to be in conformity with the Indian Accounting
Standard 24.
• Name of the related parties and nature of their relationships where control exists have been disclosed irrespective of whether or not
there have been transactions with the Company. In other cases, disclosure has been made only when there have been transactions with
those parties.
• Related parties as defined under clause 9 of the Indian Accounting Standard - 24 'Related Party Disclosures' have been identified based
on representations made by key managerial personnel and information available with the Company. All above transactions are in the
ordinary course of business and on arms' length basis. All outstanding balances are to be settled in cash and are unsecured except
secured non-convertible debentures issued to related parties which are disclosed appropriately.
• Provisions for gratuity, compensated absences and other long term service benefits are made for the Company as a whole and the
amounts pertaining to the key management personnel are not specifically identified and hence are not included above.
• As on 31 March 2025, 22 non-corporate related parties held Company's equity shares amounting to H 0.06 crore (58,290 shares of H 10
each). Transaction value with 19 non-corporate related parties during the year ended 31 March 2025 amounting to H 0.40 crore (57,352
shares of H 70 each).
• Non convertible debentures (NCDs) transaction includes only issuance from primary market, and outstanding balance is balances of
NCDs held by related parties as on reporting dates. Interest accrued on NCDs is identified based on beneficiary holder at the time of
payment to whom the interest is credited.
• The Company has a committed line of credit of H 2,500 crore from Bajaj Finance Limited (Holding Company).
45. Capital
The Company actively manages its capital base to cover risks inherent to its business and meets the capital
adequacy requirements of the regulator, the Reserve Bank of India. The adequacy of the Company's capital is
monitored using, among other measures, the regulations issued by the RBI.
(i) Capital management
Objective
The Company's objective is to maintain appropriate levels of capital to support its business strategy taking into
account the regulatory, economic and commercial environment. The Company aims to maintain a strong capital
base to support its growth strategy and the risks inherent to its business. The Company endeavours to maintain
a higher capital base than the mandated regulatory capital at all times.
Planning
The Company's assessment of capital requirement is aligned to its planned growth which forms part of an
annual operating plan which is approved by the Board and also a long range strategy. These growth plans are
aligned to assessment of risks- which include credit, liquidity and interest rate.
The Company monitors its capital adequacy ratio (CRAR) on a monthly basis through its assets liability
management committee (ALCO).
The Company endeavours to maintain its CRAR higher than the mandated regulatory norm. Accordingly,
increase in capital is planned well in advance to ensure adequate funding for its growth.
48. Fair values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the measurement date under current market
conditions (i.e. an exit price), regardless of whether that price is directly observable or estimated using a
valuation technique.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of
valuation techniques.
This note describes the fair value measurement of both financial and non-financial instruments.
Valuation framework
The Company has an internal fair value assessment team which assesses the fair values for assets qualifying
for fair valuation.
The Company's valuation framework includes:
• Benchmarking prices against observable market prices or other independent sources;
• Development and validation of fair valuation models using model logic, inputs, outputs and adjustments.
These valuation models are subject to a process of due diligence and validation before they become operational
and are continuously calibrated. These models are subject to approvals by various functions including risk,
treasury and finance functions. Finance function is responsible for establishing procedures, governing valuation
and ensuring fair values are in compliance with accounting standards.
Valuation methodologies adopted
• Fair values of investments held for trading under FVTPL and investments held under FVOCI have been
determined under level 1 (Refer note 49) using quoted market prices of the underlying instruments;
• Fair value of loans held for a business model that is achieved by both collecting contractual cash flows and
partially selling the loans through partial assignment to willing buyers and which contain contractual terms
that give rise on specified dates to cash flows that are solely payments of principal and interest are measured
at FVOCI. The fair value of these loans have been determined under level 3.
The Company has determined that the carrying values of cash and cash equivalents, trade receivables, short
term loans, floating rate loans, trade payables, short term debts, borrowings, bank overdrafts and other current
liabilities are a reasonable approximation of their fair value and hence their carrying values are deemed to be
fair value.
49. Fair value hierarchy
The Company determines fair values of financial instruments according to the following hierarchy:
Level 1- valuation based on quoted market price: financial instruments with quoted prices for identical
instruments in active markets that the Company can access at the measurement date.
Level 2- valuation using observable inputs: financial instruments with quoted prices for similar instruments in
active markets or quoted prices for identical or similar instruments in inactive markets and financial
instruments valued using models where all significant inputs are observable.
Level 3- valuation technique with significant unobservable inputs: financial instruments valued using valuation
techniques where one or more significant inputs are unobservable.
50. Risk management objectives and policies (Contd.)
(a) Liquidity risk
The Company's ALCO monitors asset liability mismatches to ensure that there are no imbalances or excessive
concentrations on either side of the Balance Sheet.
The Company maintains a judicious mix of borrowings from banks, money markets and continues to diversify its
sources of borrowings with an emphasis on longer tenor borrowings. This strategy of balancing varied sources
of funds and long tenor borrowings along with liquidity buffer has helped the Company maintain a healthy asset
liability position. The overall borrowings including debt securities stood at H 82,071.92 crore as of 31 March 2025
(Previous year H 69,129.32 crore).
The Company continuously monitors liquidity in the market; and as a part of its ALM strategy maintains a
liquidity buffer through an active investment desk to reduce this risk. The Company endeavours to maintain
liquidity buffer in the range of 3% to 5% of its overall borrowings in normal market scenario. The average liquidity
buffer for FY2025 was H 5,051 crore. Liquidity buffer was at H 2,394 crore as on 31 March 2025.
RBI vide Scale Based Regulations 2023 (SBR) and Master Directions for Housing Finance Company 2021 (as
amended from time to time) has issued guidelines on liquidity risk framework for NBFCs. It covers various
aspects of liquidity risk management such as granular level classification of buckets in structural liquidity
statement, tolerance limits thereupon, and liquidity risk management tools and principles. The Company has a
Liquidity Risk Management Framework which covers liquidity risk management policy, strategies and practices,
liquidity coverage ratio (LCR), stress testing, contingency funding plan, maturity profiling, liquidity risk
measurement - stock approach, currency risk, interest rate risk and liquidity risk monitoring framework.
The Company exceeds the regulatory requirement of LCR which mandate maintaining prescribed coverage of
expected net cash outflows for a stressed scenario in the form of high quality liquid assets (HQLA). As of
31 March 2025, the Company maintained a LCR of 192.81%, well in excess of the RBI's stipulated norm of 100%.
The Company has a Board approved Contingency Funding Plan (CFP) to respond quickly to any anticipated
or actual stressed market conditions. The primary goal of the Contingency Funding Plan (CFP) is to provide a
framework of action plan for contingency funding when the Company experiences a reduction to its liquidity
position, either from causes unique to the Company or systemic events limiting its ability to maintain normal
operations and service to customers. The CFP defines the framework to assess, measure, monitor, and respond
to potential contingency funding needs. CFP also clearly lays down the specific contingency funding sources,
conditions related to the use of these sources and when they would be used. Roles and responsibilities of the
Crisis Management Group constituted under the CFP have been identified to facilitate the effective execution of
CFP in a contingency event.
The table below summarises the maturity profile of the undiscounted cashflow of the Company's
financial liabilities:
Credit risk is the risk of financial loss arising out of customers or counterparties failing to meet their repayment
obligations to the Company. The Company has a diversified lending model and focuses on five broad categories
viz: (i) home loans, (ii) loan against property (iii) lease rental discounting, (iv) developer loans, and (v) unsecured
loans. The Company assesses the credit quality of all financial instruments that are subject to credit risk.
Classification of financial assets under various stages
The Company classifies its financial assets in three stages having the following characteristics:
• Stage 1: unimpaired and without significant increase in credit risk since initial recognition on which a
12-month allowance for ECL is recognised;
• Stage 2: a significant increase in credit risk since initial recognition on which a lifetime ECL is recognised; and
• Stage 3: objective evidence of impairment, and are therefore considered to be in default or otherwise credit
impaired on which a lifetime ECL is recognised.
Treatment and classification methodology of different stages of financial assets is detailed in note no. 4.4 (i)
Computation of impairment on financial instruments
The Company calculates impairment on financial instruments as per ECL approach prescribed under Ind AS 109
'Financial instrument'. ECL uses three main components: PD (probability of default), LGD (loss given default)
and EAD (exposure at default) along with an adjustment considering forward macro economic conditions. For
further details of computation of ECL please refer to significant accounting policies note no 4.4 (i).
The Company recalibrates components of its ECL model periodically by; (1) using the available incremental and
recent information, except where such information do not represent the future outcome, and (2) assessing
changes to its statistical techniques for a granular estimation of ECL. Accordingly, during the year, the Company
has redeveloped its ECL model and implemented the same with the approval of Audit Committee and the Board.
The Company follows simplified ECL approach under Ind AS 109 'Financial Instruments' for trade receivables,
and other financial assets.
The table below summarises the approach adopted by the Company for various components of ECL viz. PD,
EAD and LGD across product lines using empirical data where relevant:
The Company periodically monitors the market value of collateral and evaluates its exposure and loan to value
metrics for high risk customers. The Company exercises its right of repossession across all secured products.
It also resorts to invoking its right under the SARFAESI Act and other judicial remedies available against its
mortgages and commercial lending business. The repossessed assets are either sold through auction or
released to delinquent customers in case they come forward to settle their dues. The Company does not record
repossessed assets on its Balance Sheet as non-current assets held for sale.
Analysis of concentration risk
The Company focuses on granulisation of loans portfolios by expanding its geographic reach to reduce
geographic concentrations while continually calibrating its product mix across its five categories of lending
mentioned above.
ECL sensitivity analysis to forward economic conditions and management overlay
Allowance for impairment on financial instruments recognised in the financial statements reflect the effect of
a range of possible economic outcomes, calculated on a probability-weighted basis, based on the economic
scenarios described below. The recognition and measurement of expected credit losses ('ECL) involves the use
of estimation. It is necessary to formulate multiple forward-looking economic forecasts and its impact as an
integral part of ECL model.
The ECL model and its input variables are recalibrated periodically using available incremental and recent
information. It is possible that internal estimates of PD and LGD rates used in the ECL model may not always
capture all the characteristics of the market and the external environment as at the reporting date. To
reflect this, qualitative adjustments or overlays are made as temporary adjustments to reflect the emerging
risks reasonably.
Methodology
The Company has adopted the use of three scenarios, representative of its view of forecast economic
conditions, required to calculate unbiased estimation of forward looking economic adjustment to its ECL. They
represent a most likely outcome i.e. central scenario and two less likely outer scenarios referred to as the upside
and downside scenarios. The Company has assigned a 10% probability to the two outer scenarios, while the
central scenario has been assigned an 80% probability. These weights are deemed appropriate for the unbiased
estimation of impact of macro factors on ECL. The key scenario assumptions are used keeping in mind external
forecasts and Management estimates which ensure that the scenarios are unbiased.
The Company uses multiple economic factors and test their correlations with past loss trends witnessed for
building its forward economic guidance (FEG) model. During the current year, the Company evaluated various
macro factors GDP growth rates, growth of bank credit, wholesale price index (WPI), consumer price index
(CPI), industrial production index, unemployment rate, crude oil prices and policy interest rates.
Based on past correlation trends, CPI (inflation) and GDP growth rates reflected acceptable correlation
with past loss trends and were considered appropriate by the Management. GDP has a direct relation with
the income levels whereas inflation and inflationary expectations affect the disposable income of people.
Accordingly, both these macro-variables directly and indirectly impact the economy. These factors were
assigned appropriate weights to measure ECL in forecast economic conditions.
For GDP growth rate data, the Company has considered RBI projections and data published by Ministry of
Statistics & Programme Implementation, Government of India.
- While formulating the central scenario, the Company has considered average growth rate of 6.5% for
next year.
- For the downside scenario, the Company believes that the downside risks might have passed, however,
the downside nominal GDP growth rate might reach 0%. However, as per mean reversion approach,
the downside scenario assumes it to recover from the peak and normalise to around 8% within next
three years.
- For the upside scenario, the Company acknowledges various surveys and studies indicating improving
economic situation and estimates nominal GDP growth rate might reach to 19%. Subsequently, as per mean
reversion approach, the upside scenario assumes it to normalize from the peak and normalise to around 8%
within next three years.
The Reserve Bank of India (RBI) projected CPI inflation for year FY 25-26 at 4%, with Q1 at 3.6%, Q2 at 3.9%, Q3
at 3.8%, and Q4 at 4.4%.
- The central scenario assumed by the Company considered inflation of around 5 - 5.5% on conservative
basis average inflation trend of last three years.
- For the downside scenario, the Company considers that the inflation risk may continue due to various
uncertainties (geopolitical conflict, tariffs etc), and therefore assumes the inflation to touch a peak of
around 9% and subsequently normalise to around 5.8% within next three years.
- For the upside scenario, we believe that there would be certain factors which might come into play viz,
base effect, higher food grain production, continuously falling WPI, better supply chain management etc,
and, therefore, inflation may see easing to a base of around 2.4% before averaging back 5.8% within next
three years.
Additionally, the ECL model and its input variables are recalibrated periodically using available incremental
and recent information. It is possible that internal estimates of PD and LGD rates used in the ECL model may
not always capture all the characteristics of the market / external environment as at the date of the financial
statements. To reflect this, qualitative adjustments or overlays are made as temporary adjustments to reflect
the emerging risks reasonably.
Operational risk is the risk arising from inadequate or failed internal processes, people or systems, or from
external events. Operational risk is inherent in the Company's business activities, as well as in the related
support functions. BHFL has in place an internal Operational Risk Management (ORM) Framework to manage
operational risk in an effective and efficient manner. This framework aims at assessing and measuring the
magnitude of risks, its monitoring and mitigation. The key objective is to enable the Company to ascertain
an increased likelihood of an operational risk event occurring in a timely manner to take steps to mitigate the
same. It starts with identifying and defining KRI's/KPIs through process analysis and ending with formulation of
action plans in response to the observed trends in the identified metrics. This is achieved through determining
key process areas, converting them to measurable and quantifiable metrics, setting tolerance thresholds for
the same and monitoring and reporting on breaches of the tolerance thresholds in respect of these metrics.
Corrective actions are initiated to bring back the breached metrics within their acceptable threshold limits
by conducting the root cause analysis to identify the failure of underlying process, people, systems, or
external events.
Further, the Company has a comprehensive internal control systems and procedures laid down around various
key activities viz. loan acquisition, customer service, IT operations, finance function etc. Internal Audit also
conducts a detailed review of all the functions at least once a year which helps to identify process gaps on
timely basis. Information technology and operations functions have a dedicated compliance and control units
who on continuous basis review internal processes. This enables the Management to evaluate key areas of
operational risks and the process to adequately mitigate them on an ongoing basis.
The Company has a robust Disaster Recovery (DR) plan and Business Continuity Plan (BCP) to ensure
continuity of its operations including services to customers in situations such as natural disasters, technological
outage, etc. Robust periodic testing is carried, and results are analysed to address any gaps in the framework.
DR and BCP audits are conducted on a periodical basis to provide assurance regarding its effectiveness.
(A) Employee stock option plan of Bajaj Housing Finance Limited
The Board of Directors at its meeting held on 24 April 2024, approved an issue of stock options up to a
maximum of 5% of the then issued equity capital of the Company aggregating to 39,09,78,763 equity shares of
the face value of H 10 each in a manner provided in the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines 1999 subject to the approval of the shareholders. The options issued under
the ESOP Scheme vest over a period of not less than 1 year and not later than 5 years from the date of grant
with the vesting condition of continuous employment with the Company or the Group except in case of death or
permanent incapacity of an Option Grantee where the minimum vesting period of 1 year from the date of grant
shall not apply and settled by issue of shares at exercise price.
The Nomination and Remuneration Committee of the Company has approved the following grants to tenured
employees in managerial and leadership positions upon achieving defined thresholds of performance and
leadership behaviour in accordance with the Stock Option Scheme. Details of grants given up to the reporting
date under the scheme are given as under:
Determination of expected volatility
Expected volatility has been calculated based on the daily closing market price of the comparable entities.
For the year ended 31 March 2025, the Company has accounted expense of I 16.97 crore as employee benefit
expenses (note no.34) on the aforesaid employee stock option plan (Previous year I Nil). The balance in
employee stock option outstanding account is I 16.97 crore as of 31 March 2025 (Previous year I Nil).
(B) Employee stock option plan of Bajaj Finance Limited
The Nomination and Remuneration Committee of the Bajaj Finance Limited (Holding Company) has approved
grants to select senior level executives of the Company in accordance with the Stock Option Scheme. Details
of grants given upto the reporting date under the scheme, duly adjusted for sub-division of shares and issue of
bonus shares thereon, are given as under:
(C) Employee stock option plan of Bajaj Finserv Limited
The Nomination and Remuneration Committee of the Bajaj Finserv Limited (Ultimate Holding Company) has
approved grant of 47,340 stock options at an exercise price of H 1,482.64, adjusted for split and bonus, having
a bullet vesting of 5 years to select employees of the Company in accordance with the Stock Option Scheme of
the Ultimate Holding Company. Of the options granted, no option has vested, cancelled or exercised during the
year. The weighted average fair value of the option granted is H 689.20. The Ultimate Holding Company has used
the fair value method to account for the compensation cost of stock options to employees. The fair value of
options used are estimated on the date of grant using the Black - Scholes Model. The key assumptions used in
Black - Scholes Model for calculating fair value as on the date of respective grants are:
Disclosures on Risk Exposure in Derivatives
A. Qualitative disclosure
Financial Risk Management
The Company has to manage various risks associated with the lending business. These risks include liquidity
risk, interest rate risk and counterparty risk.
The Investment and market risk policy, ALM Policy and currency and interest rate risk hedging policy as
approved by the Board sets limits for exposures on various parameters. The Company manages its interest rate
in accordance with the guidelines prescribed therein.
Liquidity risk and interest rate risks, arising out of maturity mismatch of assets and liabilities, are managed
through regular monitoring of maturity profiles. As a part of Asset Liability Management, the Company has also
entered into interest rate swaps wherein it has converted a portion of its fixed rate rupee liabilities into floating
rate liability. Counter party risk is reviewed periodically to ensure that exposure to various counter parties is well
diversified and is within the limits specified by policy.
Constituents of Hedge Management Framework
Financial Risk Management of the Company constitutes the Audit & Governance Committee, Asset Liability
Committee (ALCO), Investment Committee and the Risk Management Committee.
The Company periodically monitors various counter party risk and market risk limits, within the risk architecture
and processes of the Company.
Hedging policy
The Company has a Interest rate risk and currency risk hedging approved by the Board of Directors. For
derivative contracts designated as hedges, the Company documents at inception, the relationship between the
hedging instrument and hedged item.Hedged book is reviewed periodically by the Investment Committee/ALCO
at each reporting period. Hedge effectiveness is measured by the degree to which changes in the fair value or
cashflows of the hedged item that are attributed to the hedged risk are offset by changes in the fair value or
cashflows of the hedging instrument.
Measurement and accounting
All derivative contracts are recognised on the Balance Sheet and measured at fair value. Hedge accounting is
applied to all the derivative instruments as per IND AS 109. Gains/loss, arising on account of fair value changes
in hedged item and hedging instrument, are recognised in the Statement of Profit and Loss.
The Company has entered into fair value hedges like interest rate swaps on fixed rate rupee liabilities as a part
of the interest rate risk management whereby fixed rate liabilities are converted to floating rate liabilities. The
Company has a net mark to market gain of H 41.22 crore on outstanding interest rate swap book.
53. Disclosures as required in terms of Master Direction - Non-Banking Financial Company -
Housing Finance Company (Reserve Bank) Directions, 2021, RBI/2020-21/73 DOR.FiN.hFc.
CC.No.120/03.10.136/2020-21 dated 17 February 2021 as amended from time to time (Contd.)
53.2.6.3 Details of financing of Parent Company products
The Company does not have any financing of Parent Company products during the current and previous year.
53.2.6.4 Details of Single Borrower Limit (SGL) / Group Borrower Limit (GBL) exceeded by the HFC
The Company has not exceeded the prudential exposure limits during the current and previous year.
53.2.6.5 Unsecured Advances
The Company has unsecured advances net of ECL of H 1,982.14 crore (Previous year H 2,017.93 crore) which
includes advances net of ECL of H 266.84 crore (Previous year H 271.19 crore) secured against intangible assets.
53.2.6.6 Exposure to group companies engaged in real estate business
The Company does not have any exposure to group companies engaged in real estate business during the
current and previous year.
53.3 Miscellaneous
53.3.1 Registration obtained from other financial sector regulators
The Company has obtained registration from Financial Intelligence Units, India vide Registration No. FI00030844
The Company has obtained registration from Insurance Regulatory and Development Authority vide
Registration No. CA0885
53.3.2 Disclosure of penalties imposed by NHB/RBI and other regulators
No penalty was imposed by NHB or any other regulators in current year. During the financial year 2023-24,
penalty of H 0.05 crore was imposed by RBI.
53.3.3 Related party transactions
Refer Note no. 43 Disclosure of transactions with related parties as required by Ind AS 24
53.4.13 There were no breach of covenants of loans availed or debt securities issued in current year and previous
year.
53.4.14 No disclosure on divergence in asset classification and provisioning for NPAs is required with respect
to RBI's supervisory inspection for the year ended 31 March 2024 and for the year ended 31 March 2023 as
per the requirement of the Master Direction - Non-Banking Financial Company - Housing Finance Company
(Reserve Bank) Directions, 2021 as amended from time to time.
The Liquidity coverage ratio (LCR) is one of the key parameters closely monitored by RBI to enable a more
resilient financial sector. The objective of the LCR is to promote an environment wherein Balance Sheet carry a
strong liquidity for short term cash flow requirements. To ensure strong liquidity HFCs are required to maintain
adequate pool of unencumbered high-quality liquid assets (HQLA) which can be easily converted into cash to
meet their stressed liquidity needs for 30 calendar days. The LCR is expected to improve the ability of financial
sector to absorb the shocks arising from financial and/or economic stress, thus reducing the risk of spill over
from financial sector to real economy.
The Liquidity Risk Management of the Company is managed by the Asset Liability Committee (ALCO) under the
governance of Board approved Liquidity risk framework and Asset liability management policy. The LCR levels
for the Balance Sheet date is derived by arriving the stressed expected cash inflow and outflow for the next 30
calendar days. To compute stressed cash outflow, all expected and contracted cash outflows are considered
by applying a stress of 15%. Similarly, inflows for the Company is arrived at by considering all expected and
contracted inflows by applying a haircut of 25%.
Company for purpose of computing outflows, has considered: (1) all the contractual debt repayments, (2)
expected outflows from credit facilities contracted with customers, and (3) other expected or contracted cash
outflows. Inflows comprise of: (1) expected receipt from all performing loans and other receivables, (2) liquid
investment which are unencumbered and have not been considered as part of HQLA and (3) CC/OD/committed
credit line from banks and parent Company.
For the purpose of HQLA the Company considers: (1) Unencumbered government securities, (2) Cash and
Bank balances.
The LCR is computed by dividing the stock of HQLA by its total net stressed cash outflows over next 30 days.
LCR guidelines have become effective from 1 December 2021, requiring HFCs to maintain minimum LCR of
50%, LCR requirment is gradually increased to 100% by 1 December 2024.
58. Disclosure pursuant to Regulatory Guidance on Implementation of Indian Accounting
Standards by NBFCs as referred in Annex II of Master Direction-Reserve Bank of India
(Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, as amended
from time to time
Policy for sales out of amortised cost business model portfolios
Refer Note No. 4.3(i)(a)
(c) No stressed loans transferred during the financial year ended 31 March 2025 and year ended
31 March 2024.
62. Disclosures pursuant to RBI Notification - RBI/DOR/2021-22/85 DOR.STR.REC.53/21.04.177/2021-22
dated 24 September 2021
The Company has not entered into any securitisation transactions during the current year and previous year.
63. Amounts less than H 50,000 have been shown at actual against respective line items which are statutorily
required to be disclosed.
64. Figures for the previous periods have been regrouped, wherever necessary, to make them comparable with
the current period.
The accompanying notes are an integral part of the financial statements
As per our report of even date On behalf of the Board of Directors
For Singhi & Co. For Mukund M. Chitale & Co. Atul Jain Sanjiv Bajaj
Chartered Accountants Chartered Accountants Managing Director Chairman
Firm Registration No.: 302049E Firm Registration No.: 106655W DIN: 09561712 DIN: 00014615
Amit Hundia Saurabh Chitale Gaurav Kalani Rajeev Jain
Partner Partner Chief Financial Officer Vice Chairman
Membership No.: 120761 Membership No.: 111383 din- 01550158
Atul Patni Anami N Roy
Company Secretary Director
Pune: 23 April 2025 FCS: F10094 DIN: 01361110
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