Pune Media

NBFCs stress: Is Bajaj Finance’s decline a sign of looming crisis in India’s NBFC sector?

Mumbai: A precipitate post-earnings decline in the stock of Bajaj Finance, India’s biggest, pure-play non-bank lender by market value, has underscored rising stress in hitherto bankable sectors served by such companies, with analysts looking to the festive season for most borrowers to generate the necessary cash flows that would boost both NBFC asset quality and collection efficiencies.

“We are seeing pockets of stress emerging in sectors like micro finance, personal loans, cards and also micro-SME loans,” said Anand Dama, head, BFSI Research at Emkay Global Financial Services.

“It is still not led by macro indicators. We expect this stress to continue in the second and third quarters at least, and hope that it does not deteriorate with the macro slowdown, which is difficult to predict as of now.”

While a marked improvement in banking system liquidity since last autumn has theoretically lowered the cost of NBFC financing and eased the pressure on the liabilities side of their balance sheets, the industry faces fresh challenges from the asset side now.

A sizable section of microfinance loans has turned into non-performing assets-both at banks and NBFCs-and collection efficiencies have been under the lens due to the suspect repayment ability of a section of borrowers.

Live Events

The challenges are being felt even by top NBFCs, such as Bajaj Finance, which helped millions of Indians step on to the consumption ladder for the first time over the past decade. In the post-results analyst call last week, Bajaj Finance MD Rajeev Jain said that 13 of the 17 industries the company tracks in the MSME sector are showing signs of a slowdown, while three others are showing signs of contraction.
‘NBFCs Under Stress, Can Get Festival Bang’Agencies
“So, it’s virtually a perfect storm in a way. (Our) MSME portfolio is (about) ₹50,000 crore, which is entirely unsecured. In that, principally, (loans to) doctors is ₹15,000 crore. Even there, we are seeing pressure. So this segment did not trouble us even in Covid actually. This segment is also suddenly troubled. We ran that for 15 years. It has always been 99% current kind of portfolio,” Jain said.The Bajaj Finance stock has fallen more than 8% in a week, with about 6% coming on the day after the earnings on Friday.

Jain added that within MSMEs, the problem is with the business loans, and Bajaj Finance is “going hammer and tongs” to ensure that loan repayments are at pre-Covid levels for MSME as well non-MSME loans. Even for L&T Finance, another large NBFC, asset quality deteriorated with gross stage 3 loans due past 90 days at 3.31% in June 2025 from 3.14% a year ago. As a result, impairment costs increased 39% year on year to ₹542 crore from ₹390 crore a year earlier.

CEO Sudipta Roy described it as a challenging quarter.

But analysts caution that the troubles in the MSME sector are limited to unsecured loans.

“If you see bank loans to the sector which are largely secured, they are performing well. So it is not a sector phenomenon right now.

These are companies with ₹10 crore to ₹15 crore turnover and business cycles go up and down. The festive season is crucial. If consumption recovers then we could see stress abate or things will become worse,” said Bunty Chawla, analyst at IDBI Capital. Analysts said the second half of the fiscal remains crucial as macroeconomic conditions are heavily dependent on a good monsoon and festive spending to improve both demand for loans as well as asset quality.



Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.

Aggregated From –

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More