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HomeMarket NewsExclusive: Bajaj Finance sees up to ₹400 crore annual outgo from ‘prudent flooring’ norms
Bajaj Finance expects ₹300-400 crore in additional annual provisioning due to prudent flooring norms, as it strengthens balance sheet resilience and signals a more conservative credit risk approach.
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India’s largest shadow bank, Bajaj Finance, expects additional provisioning of ₹300 crore to ₹400 crore every year due to its prudent flooring norms and remains comfortable with the impact, its CFO and COO, Sandeep Jain, told CNBC-TV18.
In the third quarter of FY26, Bajaj Finance implemented a minimum Loss Given Default (LGD) floor across all businesses — effectively setting a baseline for provisioning. Accordingly, an accelerated expected credit loss (ECL) provision of ₹1,406 crore was made, funded through proceeds from the sale of its stake in Bajaj Housing Finance Ltd.
“In Q3, to enhance our balance sheet resilience and make it bulletproof, we updated our ECL provisioning approach by establishing a ‘prudent flooring’ across all product lines and ECL stages. Our decision was based on three factors: probability of default, exposure at default, and loss given default (LGD). We focused on LGD to set a uniform prudential floor across,” Jain told CNBC-TV18, adding that this marks a permanent shift in the company’s provisioning framework.
He further said the management is inclined towards strengthening this framework over time. “Looking ahead to the next two to three years, our review will have a bias towards further enhancing this prudent flooring rather than relaxing it,” he added.
According to Jain, the move is part of Bajaj Finance’s broader strategy of positioning itself among the lowest-risk lenders in India.
Also Read: Bajaj Finance Q4 Results: Profit rises 22%; misses estimates, ₹6 dividend declared
The prudent flooring has been implemented across all loan categories and stages — from stage 1 to stage 3 — covering segments such as vehicle loans and consumer durable financing.
It is pertinent to note that Bajaj Finance’s parent, Bajaj Finserve, reported a net profit of ₹9,801 crore for FY26, up 11% year-on-year. Its adjusted net profit stood at ₹11,211 crore, up 20.4%, with the gap largely reflecting the additional provisioning towards prudent flooring.
(Edited by : SHEERSH KAPOOR)
