Bajaj Finance Q3 FY26: Navigating Growth with AI and Customer-Centricity

Bajaj Finance Limited has reported a robust performance for the third quarter of fiscal year 2026, showcasing strong core operational metrics despite the impact of certain one-time exceptional charges. The company's Assets Under Management (AUM) grew by a healthy 22% to ₹485,883 crore, reflecting significant volume expansion. Profit Before Tax (PBT) saw a 23% increase, reaching ₹7,102 crore before accounting for accelerated ECL provisions and one-time labor code charges. This consistent growth underscores Bajaj Finance's resilient business model and effective market penetration strategies.

The quarter also saw impressive customer acquisition, with 4.76 million new customers added, bringing the total customer franchise to 115.40 million. The company booked a record 13.90 million new loans, a 15% growth over the previous year. Operating efficiencies continued to improve, with the Opex to Net Total Income (NTI) ratio improving to 32.8% from 33.1% in Q3 FY25. This improvement is largely attributed to the accelerating implementation of Artificial Intelligence across various business functions.

Strategic Initiatives and AI Transformation

Bajaj Finance is deeply committed to its 'FINAI transformation,' a comprehensive strategy to embed AI across all aspects of its operations. This initiative aims to enhance productivity, reduce costs, and improve scalability, positioning the company as a future-ready financial services leader. Key advancements include the conversion of 20.7 million voice interactions to text and 5.2 lakh text-to-data conversions in Q3 FY26, which generated 1.0 lakh new loan offers. The company is also leveraging AI to generate 100% of its videos and banners, with 2.7 lakh videos and 1.2 lakh banners created in the quarter.

Further demonstrating its commitment to AI, Bajaj Finance has deployed 11 AI text BOTs for customer engagement, with plans to expand this to all 26 products by April-May 2026. The company is also piloting face recognition cameras at 323 branches and partner stores, achieving 46 million existing customer face matches to enhance identity control. In terms of operational efficiency, auto quality checks for documents are at 41% and are targeted to reach 85-90% within the next 15 months. AI-driven loan disbursements through call centers amounted to ₹1,600 crore, with an additional ₹325 crore from voice log processing.

Financial Summary (Consolidated - Q3 FY26)

Note: Figures for Q3 FY26 and Q3 FY25 are before accelerated ECL provision and one-time charge of New Labour Codes.

Proactive Risk Management and Capital Strength

Bajaj Finance has taken proactive steps to strengthen its balance sheet resilience. An accelerated Expected Credit Loss (ECL) provision of ₹1,406 crore was made in Q3, implementing a minimum Loss Given Default (LGD) floor across all businesses. This voluntary and permanent measure increased the Stage 1 Provisioning Coverage Ratio (PCR) from 74 basis points to 98 basis points, enhancing the firm's ability to withstand volatile economic environments. Despite this, the net non-performing assets (NNPA) remained healthy at 0.47%.

The company's capital adequacy remains robust, with a Capital to Risk-weighted Assets Ratio (CRAR) of 21.45% and Tier-1 capital at 20.60% as of December 31, 2025. This strong capital base provides ample headroom for future growth and absorbs potential shocks. Management also highlighted that the overall consumer leverage remains an area of concern, though bureau data indicates it has been flat year-on-year.

Outlook and Future Strategies

Looking ahead, Bajaj Finance expects its AUM growth to be between 22-23% for the full fiscal year. The cost of funds is projected to be in the range of 7.55-7.60% by the end of FY26. The company aims to add 17-18 million new customers to its franchise in FY26. For FY27, credit costs are anticipated to be between 165-175 basis points. The MSME business, which saw slower growth in Q3 due to policy actions, is expected to return to 20s growth within the next two to three quarters.

Bajaj Finance's long-range strategy (LRS 2026-30) is centered on becoming a customer-centric company, a technology leader in financial services, and the lowest-risk company in India. This involves achieving 100 million loans, 160-180 million app installs, and 3.5-4.5 billion web visitors by FY30. The company also targets a 30% digital contribution, a 31% improvement in Opex to Net Interest Margin (NIM), and a 90% reduction in operations and service costs. These ambitious goals are underpinned by continuous innovation and a disciplined approach to risk management, ensuring sustainable and profitable growth.