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Bajaj Finance in its business update said there is no change in the long-term guidance. Adding to it, Bajaj Finance said the lockdown has the worst effect on the B2B business and auto finance segment. As compared to the plan, the B2B business ad auto finance volume stood at 70% in April and 40% in May. 

Bajaj Finance delivered 60% of the planned disbursements. Due to the second wave of COVID, there will be an impact of around Rs 4000 cr to Rs 5000 cr on the AUM growth of FY22. EMI bounce rate in Q1FY22 stood at 1.08 times as compared to Q4. Bajaj Finance GNPA will increase in Q1 and Q2. It said, the credit cost of the company will increase from Rs 1100 cr to Rs 1300 cr due to the second wave of COVID. 

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Bajaj Finance Business Update:

Bajaj Finance remains open for business across all categories aided by stable EMI bounce rates in Q1 FY22.

B2B and Auto Finance businesses were most affected due to strict lockdowns in the majority of states. These businesses delivered 70% of their planned volumes in April 2021 as multiple states started imposing lockdowns from the middle of April. Their volumes dropped to 40% in May 2021. 

Most states have indicated continued lockdown till 7th or 15th June. With expected reopening, June should be much better. Other lines of businesses were less impacted in April and delivered 85% of planned disbursements. 

Bajaj Finance leveraged its digital capabilities to remain largely functional during May and delivered 60% of planned disbursements. “With expected reopening, June should be much better,” the company has said in its filing to exchanges. 

Q1 FY2022 will see higher impact on AUM due to lower volumes in B2B businesses. 

“Bajaj Finance has taken several actions to reduce its operating expenses and cost of funds to partially mitigate the financial impact caused by lower AUM growth,” it said.

Bajaj Finance Portfolio Update

— The second wave has caused a marginal increase in EMI bounce rates in Q1 FY22 over Q4 FY21. Average EMI bounce rates in Q1 FY22 were approximately 1.08X of Q4 FY21. 

— Forward flows across overdue positions were higher due to constraints on collections amidst strict lockdowns across most parts of India.

— Bajaj Finance estimates its GNPA and NNPA in Q1 and Q2 to be higher. 

— Bajaj Finance follows ECL (expected credit loss) methodology of provisioning and accordingly majority of incremental credit cost will get accounted in Q1 FY22