Gross loan losses and provisions for the quarter were ₹1,790 crore. During the quarter, the NBFC utilized a management overlay of ₹105 crore towards loan losses and provisions, as a result of which net loan losses and provisions were at ₹1,685 crore
Anshika Kayastha
Published24 Jul 2024, 07:43 PM IST
Bajaj Finance will have a clearer view on whether the muted collection trend is transient or not by the October quarter, the company’s management said.
Mumbai: Bajaj Finance’s loan loss provisions surged in the first quarter (April-June) of this financial year, driven largely by muted collections and higher provisioning requirements for ageing delinquencies.
This, the Pune-based non-bank lender said, has prompted it to now focus on improving its collection efficiency, which indicates the proportion of a loan's repayment amount that is collected.
Gross loan losses and provisions for the quarter were ₹1,790 crore. During the quarter, the non-banking financial company (NBFC) utilized a management overlay of ₹105 crore towards loan losses and provisions, as a result of which net loan losses and provisions were at ₹1,685 crore.
Management overlay is a kind of management-level provision buffer made by companies for use during emergencies or crises. In this case, Bajaj Finance built this overlay largely during the pandemic.
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Also read | Bajaj Finance Q1 results: Net profit up 13.8% YoY to ₹3,912 crore, revenue at ₹14,04 crore
In an analyst call late on Tuesday, the management said that while portfolio quality was steady and bounce rates were lower compared with the March quarter, significant movement of delinquent loans from stage 1 to stage 2 owing to muted collections led to the rise in loan losses in the June quarter.
Stage 2 assets, which warrant higher provisioning as against stage 1 assets, increased by ₹865 crore sequentially.
“The company is augmenting its debt management infrastructure as a mitigation measure,” it said in the investor presentation, with the management adding that they remain watchful of portfolio stress across business verticals and are “proactively pruning” exposure to certain customer segments.