Bajaj Finance Navigates Q2 FY26 with Robust Growth and Strategic AI Push

Bajaj Finance Limited has reported a strong performance for the second quarter and first half of fiscal year 2026, demonstrating resilience and strategic foresight amidst evolving market dynamics. The company, a leading non-banking financial company (NBFC) in India, showcased impressive growth across key financial and operational metrics, underpinned by a significant push towards AI-driven transformation.

For Q2 FY26, Bajaj Finance's consolidated Assets Under Management (AUM) surged by 24% year-on-year, reaching an impressive ₹462,261 crore. This growth was complemented by a 22% increase in Profit Before Tax (PBT) to ₹6,608 crore and a 23% rise in Profit After Tax (PAT) to ₹4,948 crore. The company also expanded its customer franchise significantly, adding 4.13 million new customers in Q2 FY26 alone, bringing the total to 110.64 million. New loans booked grew by 26% to 12.17 million, reflecting strong demand and effective market penetration.

Segmental Performance and Strategic Adjustments

While overall growth remained robust, Bajaj Finance adopted a prudent, risk-first approach in certain segments. The company acknowledged elevated credit costs, particularly in its captive 2-wheeler and 3-wheeler finance and MSME (Micro, Small, and Medium Enterprises) businesses. To mitigate these risks, unsecured MSME volumes were cut by 25%, leading to a moderated AUM growth forecast of 10-12% for MSME lending in FY26. The captive 2-wheeler and 3-wheeler finance business, despite contributing only 1.5% to overall AUM, accounted for 9% of total loan losses, prompting a planned phase-out to strengthen asset quality from FY27 onwards.

Conversely, newer lines of business such as gold loans, new car loans, commercial vehicle (CV) financing, and tractor financing demonstrated healthy growth, contributing 3% to the overall AUM growth in Q2. The company's operating efficiency also improved, with the Opex to Net Total Income ratio enhancing to 32.6% in Q2 FY26 from 33.2% in Q2 FY25, signaling effective cost management.

Financial Highlights (Consolidated) - Q2 FY26 vs Q2 FY25

The FINAI Transformation: A Future-Ready Strategy

At the core of Bajaj Finance's long-term vision is its ambitious FINAI transformation. This initiative aims to position the company as a future-ready AI financial services leader, integrating AI across all processes to drive growth, enhance customer experience, and reduce costs. The implementation is well underway, with 123 high-impact use cases identified, and 80 of these are planned to go live by February 2026.

Tangible results from FINAI are already emerging. AI voice BOT agents contributed ₹1,980 crore to Personal Loan disbursements in Q2 FY26, accounting for 18% of total call center disbursements. Five AI conversational text BOTs are live for various products, showing encouraging conversion rates. Furthermore, 85% of customer service resolutions in Q2 were handled by AI-powered service BOTs. In B2B operations, AI now performs quality checks for 42% of loan applications, enabling the processing of approximately 6.5 lakh loan applications in a single day with zero compromise on operational and compliance risks. The company is also leveraging AI for content generation, with 42% of digital banners and 100% of videos now AI-generated. By February 2026, face recognition technology will be deployed in 300 points of sales and Gold Loan branches to enhance customer experience. All 27 lines of business are expected to complete their business process re-engineering for FINAI deployment by March 2026, with significant productivity and customer experience gains anticipated.

Festive Season Momentum and Leadership Changes

The festive season (Navratri to Diwali) witnessed strong momentum, with Bajaj Finance disbursing a record 6.3 million consumer loans, marking a 27% growth in volume and 29% in value year-on-year. Overall disbursement volume during this period was 7.4 million loans, a 26% increase compared to the previous festive season. The company added 2.3 million new customers, with 52% being new-to-credit, underscoring its commitment to financial inclusion. This surge was attributed to structural reforms in income tax and GST by the Government, which boosted consumer sentiment and consumption. A premiumization trend was observed, with consumers shifting to higher-quality products like 40-inch and above TVs, which accounted for 71% of total TV financing, up from 67% last year.

In a significant leadership development, Mr. Manish Jain, Managing Director of Bajaj Financial Securities Limited (BFSL), was elevated to the position of the fourth Deputy CEO of Bajaj Finance Limited. In his expanded role, Mr. Jain will also be responsible for the company's Loan against Securities, Commercial Lending, and Deposits businesses, further strengthening the executive management group.

Outlook and Investor Confidence

Bajaj Finance maintains a positive outlook, with management guiding for AUM growth in the range of 22-23% for FY26 and expecting to add 16-17 million new customers. The cost of funds is projected to be between 7.5% and 7.55% for FY26, an improvement of 27 basis points over Q1 FY26. The company's capital adequacy ratio remains strong at 21.23%, with Tier-1 capital at 20.54%, providing a solid foundation for future growth. The company also enjoys the highest domestic credit ratings (AAA/Stable) for its long-term debt and fixed deposit programs, and an upgraded international rating (BBB/Stable) from S&P Global Ratings, reflecting its robust capital base, consistent earnings, and healthy liquidity.

Bajaj Finance's Q2 FY26 performance underscores its strategic clarity, disciplined execution, and proactive embrace of technological innovation. By balancing aggressive growth with prudent risk management and leveraging AI to enhance operational efficiencies and customer experience, the company is well-positioned to capitalize on India's economic momentum and deliver sustained value to its stakeholders.