Bajaj Finance reported a 28.7% rise in second-quarter consolidated profit to ₹6,367 crore as assets under management grew 26%, the fastest since the March 2025 quarter. Net interest income rose 24% to ₹13,335 crore, gold loans roughly doubled and credit costs fell, though gross NPAs edged up from the previous quarter.
<p>Bajaj Finance, India's largest non-bank consumer lender, reported a sharp rise in quarterly profit on Monday, October 19, as loan growth accelerated to its fastest pace in more than a year and credit costs eased.</p><p>Consolidated profit after tax rose 28.7% year on year to ₹6,367 crore, or about $671 million, in the July-to-September quarter, from ₹4,948 crore a year earlier. Net interest income, the difference between what the company earns on loans and pays on borrowings, increased 24% to ₹13,335 crore.</p><p>Assets under management grew 26% from a year earlier, the fastest growth since the quarter ended March 2025. The figures suggest that demand for consumer and small-business credit in India is recovering, even as lenders remain cautious after a period of rising delinquencies in unsecured loans.</p><h2>Where the growth came from</h2><p>The composition of growth offers clues about where Indian credit demand is strongest and where lenders are willing to take risk.</p><p>Gold loans were the standout, roughly doubling from a year earlier. Lending against gold jewellery has boomed across India as gold prices have risen to record levels, increasing the value of collateral households can pledge. Gold loans are typically short-term and secured, which makes them attractive for lenders at a time when they are wary of unsecured credit. Banks and specialised gold lenders have also expanded aggressively in the segment.</p><p>Rural consumer finance grew 63%, reflecting improved demand in villages and small towns, where households borrow to buy two-wheelers, appliances and mobile phones. Rural incomes have been supported by agricultural output and government spending, although food inflation and slower rural wage growth remain concerns.</p><p>Lending to small and medium enterprises, by contrast, grew just 3%. The company has tightened its underwriting standards in this segment after a period of higher delinquencies, choosing to slow growth rather than risk further deterioration in asset quality.</p><h2>Asset quality: better than last year, slightly worse than last quarter</h2><p>Bajaj Finance's gross non-performing asset ratio stood at 1.06% at the end of September, an improvement from 1.24% a year earlier but up from 0.96% in the previous quarter. The sequential uptick will be watched closely by analysts for signs of stress in particular customer segments.</p><p>Credit cost, the share of the loan book that the company sets aside to cover expected losses, was 1.56%, down from 1.88% a year earlier and broadly flat compared with the previous quarter. Lower credit costs were a major driver of the profit increase, as provisions consumed a smaller share of income.</p><p>The balance between growth and risk has been the central question for Bajaj Finance and its peers over the past two years. After rapid growth in small-ticket personal loans and consumer durable financing, the Reserve Bank of India raised risk weights on certain unsecured loans in late 2023 and urged lenders to strengthen underwriting. Many non-bank lenders slowed disbursements, and some reported higher defaults among borrowers with multiple loans.</p><p>Bajaj Finance's latest results suggest that it has navigated that period without a major deterioration, while finding growth in secured lending and rural markets.</p><img src="/api/files/1792495237532-d63176be977a142c6fb73b1b.webp" alt="2aa1880f-bc51-44e7-9d2e-38b58afc946d.png"><h2>Market reaction and context</h2><p>The results came on a difficult day for Indian financial stocks. The Sensex fell 876 points on October 19 as private banks dragged the market lower after their own results, and Bajaj Finance shares were among the Sensex losers during the session. Indian stock exchanges were closed on Tuesday, October 20, for Dussehra, so investors will have their next full opportunity to react when trading resumes.</p><p>Banks have faced margin pressure this year from higher deposit costs, and bond market volatility has hit treasury income. Non-bank lenders such as Bajaj Finance, which fund themselves through bonds, commercial paper and bank loans, are also sensitive to interest rates. The RBI raised its policy rate recently amid persistent inflation and rupee pressure, which could raise borrowing costs for lenders in the coming months.</p><h2>The bigger picture for Indian credit</h2><p>Bajaj Finance is often seen as a barometer of Indian consumer demand. Its loans finance everything from smartphones and televisions to two-wheelers, home renovations, small businesses and education. A 26% increase in assets under management indicates that demand for credit remains robust, particularly as the festive season, which typically sees a spike in consumer spending, gets under way.</p><p>The festive period from Dussehra to Diwali is the most important time of the year for consumer lending in India. Retailers and manufacturers offer discounts and financing schemes, and lenders compete to capture customers. Strong festive sales would support loan growth in the October-December quarter.</p><p>However, there are headwinds. High fuel prices, food inflation of nearly 8% and the weakness of the rupee could squeeze household budgets. Smartphone shipments in India fell 26% in the July-to-September quarter, according to Omdia, as rising memory prices pushed up handset costs, a sign that some categories of consumer spending are under pressure.</p><h2>What analysts will watch</h2><p>Investors will focus on several issues when they analyse the results in detail. The first is the trajectory of asset quality, especially the sequential increase in gross NPAs and the performance of the SME book. The second is the cost of funds and the potential impact of higher interest rates on margins. The third is the sustainability of gold-loan growth, which depends partly on gold prices remaining elevated.</p><p>Growth in new customer acquisition, the performance of digital channels and the company's investments in technology and artificial intelligence will also be closely watched. Bajaj Finance has built one of India's largest customer franchises, and its ability to cross-sell products to that base is central to its long-term strategy.</p><h2>Why NBFCs matter to India's credit system</h2><p>Non-bank financial companies play an outsized role in India's lending landscape. They reach customers that banks often find too small or too risky to serve profitably, from first-time borrowers in small towns to self-employed workers and micro-enterprises without formal financial records. Their ability to make quick credit decisions, often using digital data, has made them central to the growth of consumer finance.</p><h2>The outlook</h2><p>For now, Bajaj Finance's second-quarter numbers paint a picture of a lender that has regained momentum while keeping risk in check. Profit growth of nearly 29%, faster loan growth and lower credit costs are a strong combination at a time when much of India's financial sector is grappling with margin pressure.</p><p>The coming quarters will test whether that balance can be sustained as the company leans into gold loans and rural markets and as macroeconomic conditions remain uncertain. For investors looking for signs of the health of Indian consumer demand, the message from Bajaj Finance is cautiously encouraging: Indians are still borrowing, and so far they are still repaying.</p>
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