Bajaj Finance Share Price Hits 52-Week High as RBI Eases Risk Weight Norms

Bajaj Finance’s share price climbed 2.6% to reach a fresh 52-week high of ₹8,739 on the National Stock Exchange (NSE) as of 1:03 PM on February 27, 2025. The rally comes in response to the Reserve Bank of India’s (RBI) decision to ease risk weight norms for bank financing to Non-Banking Financial Companies (NBFCs) and microfinance loans.

RBI’s Policy Reversal: A Boost for NBFCs

The RBI has reversed its earlier decision from November 2023, which had imposed an additional 25% risk weight on top of the existing rating-based risk weight for bank loans to NBFCs. This reversal is expected to unlock additional funds, thereby improving liquidity in the sector.

However, the risk weight for unsecured retail loans remains unchanged. The risk weight for personal loans and credit card outstandings held by NBFCs continues to be 125%, up from the previous 100%, reinforcing the central bank’s cautious stance on unsecured lending.

A Positive Sentiment for the NBFC Sector

The relaxation of risk weights is anticipated to provide relief across the NBFC sector by improving credit availability. With increased lending capacity, NBFCs can continue their growth momentum and expand their loan books.

Strong Q3 Performance Underpins Bajaj Finance’s Growth

Bajaj Finance has showcased a strong financial performance, further reinforcing investor confidence:

• Net Profit Growth: The company posted an 18% year-on-year (YoY) increase in consolidated net profit for Q3 FY25, reaching ₹4,308 crore.
• Rising Net Interest Income (NII): NII surged 23% YoY to ₹9,382 crore, compared to ₹7,655 crore in Q3 FY24.
• Robust Asset Expansion: Assets under management (AUM) soared by 28% YoY to ₹3.98 lakh crore as of 31 December 2024, compared to ₹3.11 lakh crore in the previous year.

Asset Quality and Provisions: A Closer Look

While the financial performance remained strong, the company faced a slight deterioration in asset quality:

• Gross Non-Performing Assets (GNPA): Increased to 1.12% as of 31 December 2024, from 0.95% a year earlier.
• Net Non-Performing Assets (NNPA): Rose to 0.48% from 0.37% YoY.
• Provisioning Coverage: The coverage ratio for stage 3 assets stood at 57%.

Additionally, provisions for loan losses surged to ₹2,043 crore in Q3 FY25, up from ₹1,248 crore in the corresponding period of the previous year. As a percentage of average assets under finance, loan losses and provisions stood at 2.16%.

Conclusion

The RBI’s decision to roll back additional risk weights on bank loans to NBFCs has significantly improved market sentiment, pushing Bajaj Finance to a new 52-week high. 

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