Is Bajaj Finance's decline a sign of looming crisis in India's NBFC sector?
ADVERTISEMENT "We are seeing pockets of stress emerging in sectors like micro finance, personal loans, cards and also micro-SME loans," said Anand Dama, head, BFSI Research at Emkay Global Financial Services.
"It is still not led by macro indicators. We expect this stress to continue in the second and third quarters at least, and hope that it does not deteriorate with the macro slowdown, which is difficult to predict as of now."
While a marked improvement in banking system liquidity since last autumn has theoretically lowered the cost of NBFC financing and eased the pressure on the liabilities side of their balance sheets, the industry faces fresh challenges from the asset side now. A sizable section of microfinance loans has turned into non-performing assets-both at banks and NBFCs-and collection efficiencies have been under the lens due to the suspect repayment ability of a section of borrowers.The challenges are being felt even by top NBFCs, such as Bajaj Finance, which helped millions of Indians step on to the consumption ladder for the first time over the past decade. In the post-results analyst call last week, Bajaj Finance MD Rajeev Jain said that 13 of the 17 industries the company tracks in the MSME sector are showing signs of a slowdown, while three others are showing signs of contraction.
ADVERTISEMENT "So, it's virtually a perfect storm in a way. (Our) MSME portfolio is (about) ₹50,000 crore, which is entirely unsecured. In that, principally, (loans to) doctors is ₹15,000 crore. Even there, we are seeing pressure. So this segment did not trouble us even in Covid actually. This segment is also suddenly troubled. We ran that for 15 years. It has always been 99% current kind of portfolio," Jain said.The Bajaj Finance stock has fallen more than 8% in a week, with about 6% coming on the day after the earnings on Friday.
ADVERTISEMENT Jain added that within MSMEs, the problem is with the business loans, and Bajaj Finance is "going hammer and tongs" to ensure that loan repayments are at pre-Covid levels for MSME as well non-MSME loans. Even for L&T Finance, another large NBFC, asset quality deteriorated with gross stage 3 loans due past 90 days at 3.31% in June 2025 from 3.14% a year ago. As a result, impairment costs increased 39% year on year to ₹542 crore from ₹390 crore a year earlier.CEO Sudipta Roy described it as a challenging quarter.
ADVERTISEMENT But analysts caution that the troubles in the MSME sector are limited to unsecured loans."If you see bank loans to the sector which are largely secured, they are performing well. So it is not a sector phenomenon right now.
ADVERTISEMENT These are companies with ₹10 crore to ₹15 crore turnover and business cycles go up and down. The festive season is crucial. If consumption recovers then we could see stress abate or things will become worse," said Bunty Chawla, analyst at IDBI Capital. Analysts said the second half of the fiscal remains crucial as macroeconomic conditions are heavily dependent on a good monsoon and festive spending to improve both demand for loans as well as asset quality.
(You can now subscribe to our ETMarkets WhatsApp channel)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
4 hours ago
- Economic Times
Shaadi.com founder Anupam Mittal slams US over visa delays, says Indians are powering its economy; Hails India-UK trade deal
Synopsis Anupam Mittal, the founder of has criticised the United States for its sluggish progress on trade and visa matters, in contrast to the UK's more welcoming stance. He highlighted the significant contributions of Indians to the US economy, especially in the fields of technology and finance, while urging India to assert its economic influence and demand fair treatment. Anupam Mittal (Image: Linkedin) founder Anupam Mittal didn't hold back as he criticised the United States for dragging its feet on trade and visa matters. In a viral post on LinkedIn, Mittal praised India's new trade agreement with the UK, calling it a major shift in global power dynamics.'After years of colonial hangover, it's finally India calling the shots,' he wrote, taking a clear dig at the US for failing to keep the UK seems to be rolling out the red carpet, Mittal said the US is still 'playing hardball.' He pointed out the irony, Indians are no longer just exporting goods, they're actually powering the American economy.'Tech? Mostly run by Indians. Wall Street? Flooded with Indian-origin fund managers. Even the new CEO of P&G is Indian. And most VC-backed startups? You'll likely find at least one Indian founder at the table,' he said. Mittal noted that while Indians are making waves across industries, the US hasn't updated its policies to reflect this change. 'What we're seeing is more posturing than partnership,' he wrote. He even suggested that India should no longer accept such behaviour quietly. 'India needs to flex its diplomatic and economic muscle. Time for a counter ultimatum, play fair or we bring back our Kohinoors,' he said cheekily, along with an AI image of himself on a billboard in Times post struck a chord online, with many agreeing that India is no longer waiting for a seat at the table. One user wrote, 'We're redesigning the table. Talent, tech, leadership, that's where India wins.'Another added, 'The rise of Indian talent is clear as day. What's missing is policy support that respects this rise.'
Hindustan Times
6 hours ago
- Hindustan Times
Shaadi.com founder slams US for visa, trade delays: 'Indians are building US economy'
founder Anupam Mittal shared a message for US after India's recent breakthrough trade agreement with the UK. In a viral LinkedIn post, Mittal hailed the new trade deal as a symbolic close to colonial baggage. 'After years of colonial hangover, it's finally India calling the shots,' he wrote, criticising US for not following through in a similar way. Anupam Mittal argued that America's stance shows more 'posture than partnership" 'While the UK's rolling out the red US seems to be playing hardball. Here's the irony > We're not just exporting goods & services anymore. Indians are shining brighter than diamonds & building the US economy. Tech? Mostly run by Indians. Wall Street? Flooded with Indian-origin fund managers. P&G's latest CEO? Indian again. And VC-backed startups? At least one Indian founder on the cap table. There was a time when being Indian was a ceiling in corporate America. Now it's almost a prerequisite," he said. However, Mittal pointed out, US has not adapted its policy approach accordingly, even as Indians are "building the US economy". He argued that America's stance shows more 'posture than partnership", and India needs to flex its diplomatic and economic muscle. 'India needs a favourable trade deal, but it is engaging on its own terms. So dear America, doesn't look like bullying will work. India should issue a counter ultimatum—play ball or we bring back our Kohinoors," he added, sharing an AI-generated picture of himself at Times Square. The post struck a chord online with many supporting his call for an ultimatum to US. "India's no longer waiting for a seat, it's redesigning the table, and this is just the start. It is all going to be about talent, tech, leadership, and leverage," said one of them. Another added, "The rise of Indian leadership in global business is undeniable. What's missing now is policy support that matches the impact of this talent. "
Time of India
8 hours ago
- Time of India
Americans furious as Miami hotel hires Indian virtual receptionist over local staff: 'Is this how you do business in the USA?'
Indians are making waves across the globe, but a virtual Indian receptionist at a Miami hotel wasn't on anyone's 2025 bingo card. La Quinta Inn in Miami is now facing backlash after it was revealed that guests are being checked in via video call by staff based in India, rather than by local front desk employees. While some social media users applauded the efficiency, many criticised the move, arguing the hotel should be hiring locally to support the community and boost the U.S. job market. Miami Inn under fire for outsourcing front desk jobs to India La Quinta Inn in Miami is facing major backlash after a video showed the hotel has outsourced its front desk operations to India. Instead of being greeted by a local receptionist, guests are now welcomed via video call by a virtual representative based thousands of miles away. In the now-viral video, an Indian man connected virtually is seen guiding the guest through the process. The move has sparked criticism from locals, with many seeing it as part of a growing trend of American jobs being sent overseas. Locals argue that the hotel should be hiring locally to support the community and provide employment opportunities within the U.S. 🔥🚨BREAKING: This La Quinta Inn hotel located in Miami is under massive fire after they hired employees located in India to check guests in instead of having Americans at the front desk. Outrage online as Miami hotel checks in guests from India Furious netizens slammed the hotel for outsourcing jobs abroad instead of supporting local workers. One user tagged the hotel, writing, "Is this how you do business in the USA? You prefer to hire employees of a third-world country rather than employees of a first-world country to save pennies?" "This is almost comical at this point. India needs to be paying Americans to have to deal with them," another said. Im sorry to have to say this but from now and until 2035 we will see this gradually until millions of jobs worldwide is replaced by Automation. They tell us we will have new jobs and education, and they hint at possible universal income, but I have my doubts 😔 One user mentioned, "I'm sorry to have to say this, but from now until 2035 we will see this gradually until millions of jobs worldwide are replaced by Automation. They tell us we will have new jobs and education, and they hint at possible universal income, but I have my doubts." Im sorry to have to say this but from now and until 2035 we will see this gradually until millions of jobs worldwide is replaced by Automation. They tell us we will have new jobs and education, and they hint at possible universal income, but I have my doubts 😔 "Outsourcing saves money, but at what cost to community trust and local opportunity?" one user reasoned. Outsourcing saves money, but at what cost to community trust and local opportunity? Why U.S. rely so heavily on Indian talent Indian professionals make up a significant portion of the U.S. workforce, thanks to their strong technical skills and educational background, particularly in STEM fields. This trend has only accelerated in recent years, with increasing demand for expertise in areas like software development, data science, cloud computing, and artificial intelligence. According to Financial Express, more than 70% of all H-1B work visas in 2023 were granted to Indian applicants, underscoring the vital role they play in sustaining U.S. innovation and competitiveness. This reliance, however, has also sparked debates around job availability, immigration policies, and the need to balance domestic hiring with international talent acquisition. Still, industry experts agree that without access to global talent, particularly from India, the U.S. tech ecosystem would face significant slowdowns in growth and innovation. To stay updated on the stories that are going viral, follow Indiatimes Trending.
