Bajaj Finance Reports Rs 1,556 Crore in Microfinance Loans for Q1FY26

Bajaj Finance announced a significant milestone on July 24, revealing a microfinance loan portfolio of Rs 1,556 crore for the first quarter of the financial year 2026 (Q1FY26). This marks the company’s inaugural report of microfinance loans as a distinct business segment, following its decision to separate the microfinance operations from its Rural B2C Loans category.

Previously, Bajaj Finance included its microfinance activities within the broader Rural B2C Loans division. The company has now established a dedicated microfinance business, which is primarily sourced through its network of microfinance institutions (MFIs). As detailed in its investor presentation, Bajaj Finance operates a total of 337 MFI branches and has recently expanded its footprint by adding four new standalone branches during the reporting quarter.

In a strategic move to venture into the microfinance arena, Sanjiv Bajaj, Chairman and Managing Director of Bajaj Finserv, outlined plans to enter this segment by 2025 during his address at the All India Management Association’s 8th National Leadership Conclave in 2023.

On the asset quality front, the company reported a gross non-performing asset (NPA) figure of Rs 17 crore as of June 30, 2025, with a net NPA of Rs 5 crore. The provision coverage ratio for MFI loans stood at 73 percent, reflecting the company’s commitment to maintaining a strong balance sheet.

Challenges in the Microfinance Sector

The microfinance industry has faced significant challenges in recent quarters, including rising NPAs and decreased collection efficiencies. In response to these issues, a self-regulatory organization (SRO) for microfinance institutions has implemented measures aimed at stabilizing the sector. Furthermore, earlier this year, the Karnataka government approved the Karnataka Microfinance (Prevention of Coercive Actions) Ordinance, 2025, which seeks to mitigate coercive lending practices within the state.

As Bajaj Finance navigates the evolving landscape of microfinance, its recent separation of this business segment from Rural B2C Loans signals a strategic pivot that may provide greater clarity and focus in managing its microfinance operations. The company’s proactive measures and commitment to transparency could enhance its resilience in a sector currently grappling with regulatory and operational challenges.