3.8 Provisions, contingent liabilities and commitments
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.
3.9 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.
(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 Life Insurance Limited. However, any deficits in plan assets managed by LIC
and Bajaj Life Insurance 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) Compensated absences
The Company treats its liability for compensated absences based on actuarial valuation as at the
Balance Sheet date, determined by an independent actuary using the Projected Unit Credit method.
(d) 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 and 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 and Loss.
3.10 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. 52.
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. 51 and 52.
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.
3.11 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 (SARFAES) 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. 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.
In May 2025, MCA notified amendments to Ind AS 21 'The Effects of Changes in Foreign Exchange Rates',
applicable w.e.f. 1 April 2025. The Company has no impact of these amendments.
In August 2025, MCA notified the following amendments to:
• Ind AS 1 'Presentation of Financial Statements', applicable w.e.f. 1 April 2025 - The amendment relates
to classification of liabilities as current or non-current and non-current liabilities with covenants. In
the context of classifying a liability as current, it removes the requirement of existence of a right to
defer settlement for at least 12 months after the reporting date and instead requires that the said right
should exist on the reporting date and have substance. The amendment also introduces guidance on
classification of liabilities with covenants. This amendment is not applicable to the Company.
• Ind AS 7 'Statement of Cash Flows' and Ind AS 107 'Financial Instruments: Disclosures', applicable
w.e.f. 1 April 2025 - The amendment in Ind AS 7 requires to inform users of financial statements of the
existence of supplier finance arrangements and explain the nature of the arrangements, the carrying
amount of liabilities and the range of payment due dates. Ind AS 107 has been amended to add supplier
finance arrangements as a factor that may cause concentration of liquidity risk. The Company has no
impact of these amendments.
• Ind AS 12 'International Tax Reform' - Pillar Two Model Rules applicable with immediate effect- The
amendments provide a temporary mandatory relief from deferred tax accounting for top-up tax and
disclose that they have applied the relief. This amendement is not applicable to the Company.
Loans including instalment and interest outstanding amounting H 47.06 crore (Previous year H 59.07 crore)
in respect of properties held for disposal under Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 [SARFAESI].
The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMPs and
the related parties (as defined under the Companies Act, 2013), either severally or jointly with any other person
that are (a) repayable on demand or (b) without specifying any terms or period of repayment.
Change in Business Model
The Company used to assign home loans to external partners as part of its treasury strategy. Considering the
change in regulatory requirement relating to Principal Business Criteria (PBC), the Company reassessed the
need for a change in the business model for its home loan portfolio. In order to retain higher proportion of home
loan portfolio as part of total assets, the Company had done insignificant amount of assignment transactions
for its home loan portfolio. This was necessitated due to the change in regulatory landscape applicable for the
Company to continue to be classified as a Housing Finance Company. Accordingly, the Company reassessed its
business model of collecting cash flows for home loan portfolio from 'Hold to collect and sell' to 'Hold to collect'
and consequently, with effect from 1 April 2025, has reclassified such loan balances amounting to H 54,128.76
crore from FVOCI category to Amortised Cost category.
Principal Business Criteria (PBC)
As per the Reserve Bank of India (Housing Finance Companies) Directions, 2025, HFCs are required to maintain
minimum 60% of total assets (netted off by intangible assets) towards housing finance and 50% of total assets
(netted off by intangible assets) for individual housing finance. As at 31 March 2026, BHFL has 60.88% of total
assets (netted off by intangible assets) towards housing finance (As at 31 March 2025: 63.28%) and 50.45% of
total assets (netted off by intangible assets) towards individual housing finance (As at 31 March 2025: 51.72%).
‘Nature of security for term loans taken from Banks
Secured against hypothecation of book debts, loan receivables and other receivables.
$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 3,789.34 crore during the year ended 31 March 2026 (Previous year
H 2,893.75 crore) against eligible individual Housing loans under various refinance schemes.
•Represents associated liabilities in respect of securitisation transactions, the net outstanding value (Net of Investment in Pass-through
Certificates) of the proceeds received by the Company from the Trust. The Company has provided additional external credit enhancement
to the Trust by way of cash collateral.
The Company has no pending charges or satisfaction which are required to be registered with ROC.
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.
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 Allotment Committee allotted 41,87,918 equity shares on 11 April 2025, having face value of H 10 each
at applicable grant price to the Bajaj Housing Finance ESOP Trust under Employee Stock Option Scheme,
2024. Pursuant to the aforesaid allotment of equity shares, the issued, subscribed and paid-up capital of the
Company stands increased to H 83,28,66,20,060 (8,32,86,62,006 equity shares of H 10 each).
During the financial year ended 31 March 2025, the Company allotted 1,10,74,19,709 equity shares having
face value of H 10 each under right issue to its Holding Company (Bajaj Finance Limited) on 3 April 2024 at a
premium of H 8.06 per share involving aggregate amount of H 19,99,99,99,944.54. The Company made an Initial
Public Offer (IPO) for 93,71,42,856 equity shares of H 10 each, comprising a fresh issue of 50,85,71,428 equity
shares of the Company and 42,85,71,428 equity shares offered for sale by selling shareholders. The equity
shares were issued at a price of H 70 per equity share (including a Share Premium of H 60 per equity share).
The Company's equity shares got listed on National Stock Exchange of India Limited and on BSE Limited on
16 September 2024.
b. Terms/rights/restrictions attached to equity shares
The Company has only one class of equity shares having a face value of H 10 per share. All these
equity shares have the same rights and preferences with respect to payment of dividend, repayment
of capital and voting. Repayment of capital will be in proportion to the number of equity shares held by
the shareholders.
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 previous 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).
iv. Other comprehensive income
(a) On loans
The Company recognises changes in the fair value of debt instruments held with a dual business
objective of collect and sell in other comprehensive income. These changes are accumulated in the
FVOCI debt instrument reserve. The Company transfers amounts from this reserve to profit or loss
when the debt instrument is sold. Any impairment loss on such instruments is reclassified immediately
to the Statement of Profit and Loss.
(b) Investment measured at FVOCI
The Company recognises changes in the fair value of debt instruments held with a dual business
objective of collect and sell in other comprehensive income. These changes are accumulated in the
FVOCI debt investments reserve. The Company transfers amounts from this reserve to profit or loss
when the debt instrument is sold. Any impairment loss on such instruments is reclassified immediately
to the Statement of Profit and Loss.
v. Share options outstanding account
Share options outstanding account is created as required by Ind AS 102 'Share Based Payments' on the
Employee Stock Option Scheme operated by the Company for employees of the Company.
36. Exceptional Item (Contd.)
On 21 November 2025, the Government of India consolidated 29 existing labour legislations into a unified
framework comprising 4 Labour codes. In accordance with the requirements of Ind AS 19 'Employee Benefits',
these changes have resulted in an increase in the past service cost of gratuity by H13.14 crore. Considering
that the enactment of the new legislation is a non-recurring event, the Company has presented this one¬
time charge under 'Exceptional Item'. The Company continues to monitor the finalisation of the Central and
State Rules and clarifications from the Government on the New Labour Codes and shall provide appropriate
accounting effect based on such developments, as necessary.
37. Earnings per share (EPS)
Basic EPS is calculated in accordance with Ind AS 33 'Earning Per Share' by dividing the net profit for the year
attributable to equity holders of the Company by the weighted average number of equity shares outstanding
during the year. Diluted EPS is calculated by dividing the net profit attributable to equity holders of the
Company by the weighted average number of equity shares outstanding during the year plus the weighted
average number of equity shares that would be issued on conversion of all the dilutive potential equity shares
into equity shares of the Company.
38. Segment information
The Company is engaged primarily in the business of financing and accordingly there are no separate reportable segments
as per Ind AS 108 dealing with Operating Segment. The Company operates in a single geographical segment i.e. domestic.
No single customer represents 10% or more of the total revenue for the year ended 31 March 2026 and 31 March 2025.
39. Penalties imposed by NHB/RBI and other regulators
No penalty was imposed by NHB/RBI and any other regulators in the current year and previous year.
40(a). Transfer of financial assets that are derecognised in their entirety but where the
Company has continuing involvement
The Company has not transferred any assets that are derecognised in their entirety where the Company
continues to have continuing involvement.
43. Employee benefits plan (Contd.)
Gratuity
With the introduction of the Code on Social Security (CoSS), 2020 w.e.f. 21 November 2025, the
Payment of Gratuity Act, 1972 is repealed. While the Act has been repealed, its core provisions have been
incorporated into the new Code.
The Company has a gratuity plan for its employees which is higher of:
• Gratuity computed on the basis of wages (as defined in CoSS) or H 20 Lakh, whichever is lower; and
• Gratuity computed on the basis of Company's gratuity scheme.
Employees other than fixed term employees, who are in continuous service for a period of 5 years; and
fixed-term employees who are in continuous service for a period of one year, are eligible for gratuity. The
level of benefits provided depends on the employee's length of service and salary at retirement age.
Gratuity plan is funded by the Company. Payment for present liability of future payment of gratuity is made
to the approved gratuity fund under cash accumulation policy and debt fund. Any deficits/ surplus in plan
assets as compared to actuarial liability determined by an actuary are recognised as a liability/ asset.
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 an actuary 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 is recognised in Statement of Profit and Loss. Remeasurements are not
reclassified to profit or loss in subsequent periods.
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 Ind AS 24 'Related Party
Disclosures'.
• 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 between the related parties. 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 2026, 19 non-corporate related parties held Company's equity shares amounting to H 0.05 crore (47,384 shares of H 10
each) (Previous Year 58,290 shares of H 10 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)
48. 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 minimum regulatory requirement of 15%.
Accordingly, increase in capital is planned well in advance to ensure adequate funding for its growth.
51. 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 financial instruments, other than those which are subsequently measured at amortised cost, have
been arrived at as under:
• Fair values of investments held for trading under FVTPL and investments held under FVOCI have been
determined under level 1 (Refer note 52) 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.
52. 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 active 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.
53. 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. The Company for the first time raised
funds by way of securitisation of loans receivables in FY 2026. 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 1,03,703.99 crore as of 31 March 2026
(Previous year H 82,071.92 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
investments for the financial year 2025-26 was H 3,979 crore. Liquidity buffer was at H 2,662 crore as on
31 March 2026.
RBI has issued guidelines on liquidity risk framework for NBFCs, covering 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 Board approved 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 2026, the Company maintained a LCR of 152.52%, 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:
(b) Market risk
Market risk is the risk that the fair value of future cash flow of financial instruments will fluctuate due to changes
in the market variables such as interest rates, foreign exchange rates and security prices.
Interest rate risk
On assets and liabilities
For floating rate asset and liabilities sensitivity analysis is prepared assuming the amount outstanding at the
end of the reporting period was outstanding for the whole year. The following table demonstrate the sensitivity
to a reasonably possible change in interest rate on that portion of loans and borrowings affected. With all other
variable held constant, the Company's profit before tax is affected through the impact on floating rate financial
asset and liabilities, as follows:
(c) Credit risk
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. 3.3 (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 3.3 (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:
Collateral valuation
The Company offers loans to customers across various lending verticals as articulated above. These loans
includes both unsecured loans and loans 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 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.
Guarantee cover taken on loans
The Company takes guarantee cover for certain qualifying portfolios under Credit Risk Guarantee Fund Trust for
Low Income Housing (CRGFTLIH) governed by National Credit Guarantee Trustee Company Limited (NCGTC).
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), core inflation, industrial production index, unemployment rate, crude oil prices and policy interest rates.
Based on past correlation trends, 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 and Programme Implementation, Government of India.
- While formulating the central scenario, the Company has considered average growth rate of 7% for next year.
- In the downside scenario, factoring in heightened geopolitical risks and a potential war-related disruption,
GDP growth is assumed to decline to -2%. However, consistent with a mean reversion approach, this
contraction is considered temporary. The scenario assumes that growth gradually rebounds from the trough
and normalizes to approximately 8% , reflecting economic stabilization and recovery following the shock.
- For the upside scenario, the Company acknowledges various surveys and studies indicating improving
economic situation and estimates GDP growth rate might reach to 14%. Subsequently, as per mean
reversion approach, the upside scenario assumes it to normalise from the peak and normalise to around 8%
within next three years.
For Inflation data, the Company has considered RBI reports and data published by Ministry of Statistics &
Programme Implementation, Government of India.
- The central scenario assumed by the Company considered peak inflation of 4.2% basis average trendlines
of last 3 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 8% and subsequently normalise to around 3.4%.
- For the upside scenario, we believe that there would be certain factors which might come into play viz, base
effect, continuously falling WPI, better supply chain management etc, and, as a result, inflation is assumed to
well-anchored, stabilising in range of 3.3% to 3.4%. This range represents the lowest inflation rate considered
under the upside scenario, and no further downward deviation has been assumed, given structural and
policy-related constraints that are likely to prevent inflation from falling meaningfully below this level.
Additionally, the ECL model and its input variables are recalibrated periodically using available incremental and
up to date information. However, it is recognised that internal estimates of PD and LGD rates used in the ECL
framework may not, at all times, fully capture the rapidly evolving market conditions or external environmental
factors prevailing at the reporting date. Accordingly, Management applies qualitative overlays and post model
adjustments, where necessary, as temporary measures to appropriately reflect emerging and non linear risks
that are not adequately incorporated in the model based estimates.
53. Risk management objectives and policies (Contd.)
(d) Operational risk
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. 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. This is achieved through determining key process areas, converting these to measurable and quantifiable
metrics (KRIs), setting thresholds for KRIs, monitoring and reporting on breaches of the tolerance levels.
Corrective actions are initiated to bring back the breached metrics within their acceptable thresholds by
conducting the root cause analysis to identify the failure of underlying process, people, systems, or external
events, if any.
Further, the Company has comprehensive procedures and controls laid down by respective businesses around
various key activities viz. loan acquisition, customer service, IT operations, finance function etc. Company also
has a dedicated ORM unit to review and monitor operational risk in coordination with respective business/
functions along with ORM SPOCs identified within each business unit. 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.
54. Employee stock option plan
(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 Companies Act, 2013 subject to the approval of the
shareholders. The shareholders of the Company vide their special resolution passed at Extraordinary General
Meeting on 24 April 2024 approved the issue of equity shares of the Company under Employee Stock Option
Scheme. Subsequently, it was ratified by shareholders vide special resolution passed through postal ballot
on 21 December 2024 in line with the requirements of Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021. 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 2026, the Company has accounted expense of H 32.06 crore as employee benefit
expenses (note no.34) on the aforesaid employee stock option plan (Previous year H 16.97 crore). The balance in
employee stock option outstanding account is H 48.01 crore as of 31 March 2026 (Previous year H 16.97 crore).
(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:
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
55. Utilisation of borrowed funds
Details of transaction where the Company has received fund from entities (Funding party) with the
understanding that the Company shall directly or indirectly lend or invest in other entities.
There were no transaction where the Company had received fund from entities (Funding party) with the
understanding that the Company shall directly or indirectly lend or invest in other entity during the financial
year ended 31 March 2026 and 31 March 2025.
56. Disclosures pursuant to RBI Direction - RBI/DOS/2024-25/120 D0S.C0.FMG.SEC.No.7/23.04.001/2024-25,
'Reserve Bank of India Master Directions (MD) on Fraud Risk Management in Non-Banking Financial Companies
(NBFCs) (including Housing Finance Companies)' dated 15 July 2024, as amended from time to time.
The Company has reported fraud amounting to H 0.85 crore during the year ended 31 March 2026
(Previous year Nil).
57. Disclosures pursuant to RBI Direction - RBI/DoR/2025-26/365 DoR.FIN.REC.284/03-10-119/2025-26, ’Reserve
Bank of India (Housing Finance Companies) Directions’ dated 28 November 2025, as amended from time to time.
59.1 Loans against gold and silver collateral
The Company has not granted any loans against collateral of gold and silver in current year and previous year.
59.2 Project finance
In accordance with the Reserve Bank of India (Non-Banking Financial Companies - Resolution of Stressed
Assets) Directions 28 November 2025, no resolution plans have been implemented during the period ended
31 March 2026 in projects financed on or after 1 October 2025.
59.3 Details of Co-lending arrangements (CLAs)
In accordance with the Reserve Bank of India (Non-Banking Financial Companies - Transfer and Distribution of
Credit Risk) Directions dated 28 November 2025, the relevant provisions of Co-lending arrangements are effective
from 1 January 2026. The Company has not entered into new Co-lending arrangements on/ after 1 January 2026.
(vi) Institutional set-up for liquidity risk management
The Company manages its liquidity risk management framework through various means like liquidity
buffers, sourcing of long-term funds, positive asset liability mismatch, keeping strong pipeline of sanctions
and approvals from banks and assignment of loans under the guidance of ALCO and Board. For qualitative
disclosure on liquidity risk management, refer note no. 53.
59.13 Credit default swaps
The Company has not entered into any credit default swap during the current and previous year.
Exchange Traded Interest Rate (IR) Derivative
The Company has not entered into any exchange traded derivative during the current and previous year.
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
risk 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 and 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/ losses, 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 loss of H 61.58 crore on outstanding interest rate swap book.
59.20 Exposure
(i) Details of financing of Parent Company products
The Company does not have any financing of Parent Company products during the current and previous year.
(ii) 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.
(iii) Unsecured Advances
The Company has unsecured advances net of ECL of H 2,249.35 crore (Previous year H 1,982.14 crore)
which includes advances net of ECL of H 546.33 crore (Previous year H 266.84 crore) secured against
intangible assets.
59.21 Breach of covenants
There were no breach of covenants of loans availed or debt securities issued in current year and previous year.
59.22 Divergence in asset classification and provisioning
No disclosure on divergence in asset classification and provisioning for NPAs is required with respect to NHB's
supervisory inspection for the year ended 31 March 2025 and for the year ended 31 March 2024.
59.23 Registration 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.
59.24 Area of operation
The Company is domiciled as well as has its operations in India.
59.30 Draw down from statutory reserve created u/s 29C of the National Housing Bank Act, 1987
The Company has not drawn any amount from statutory reserve created u/s 29C of the National Housing Bank
Act, 1987 during the current year and previous year.
59.31 Concentration of deposits, advances, exposures and NPAs
(i) Concentration of deposits (for deposit taking NBFC)
The Company is non-public deposit taking housing finance company, hence not applicable.
59.33 Overseas assets
The Company has not held any overseas assets as on reporting date (Previous year H Nil).
59.34 Off-balance sheet SPVs sponsored (which are required to be consolidated as per
accounting norms)
The Company does not have any SPVs sponsored in current year and previous year which were required to be
consolidated as per accounting norms.
59.35 Off-balance sheet exposures and structured products
Refer note no. 44 for off-balance sheet exposure. The Company has not issued any structured product during
the current and previous year.
59.36 Liquidity Coverage Ratio (LCR)
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 are 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)
59.37 Currency Options
The Company has not undertaken any transaction in currency options market during the current year and
previous year.
59.38 Policy for sales out of amortised cost business model portfolios
Refer Note No. 3.3(i)(a).
60. Amounts less than H 50,000 have been shown at actual against respective line items which are statutorily
required to be disclosed.
61. Figures for the previous periods have been regrouped, wherever necessary, to make them comparable with
the current period.
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