How Bajaj Housing Finance became the third-largest housing finance player

When Bajaj Housing Finance Ltd (BHFL) was hived off from Bajaj Finance in 2017, the expectations were high considering the standards Bajaj Group’s financial services businesses have set by their use of technology to power unprecedented growth and wealth creation. BHFL has surpassed those expectations.

In just eight years in operation as a standalone entity, BHFL has evolved into one of India’s fastest-growing housing finance companies (HFCs). After a stellar stock market debut in September 2024, BHFL is aggressively challenging a territory historically dominated by banks.

Since its foray into the mortgage business, the company has consistently outpaced industry peers and maintained credit growth of around 25%. BHFL reached a milestone last fiscal when its balance sheet crossed Rs 1 lakh crore, the third-largest after LIC Housing Finance and Housing and Urban Development Corporation Ltd.

In mortgage lending, high growth usually comes with high risk, but BHFL has managed to buck the trend. Between FY22 and FY25, the company witnessed a compound annual growth rate of 28.88% in disbursals, while maintaining one of the cleanest books in the business.

“BHFL has maintained growth without diluting asset quality,” says Ninad Jadhav, Equity Research Analyst at brokerage firm LKP Securities. Gross non-performing assets have remained stable between 0.2% and 0.3%.

“The company is expected to maintain this trajectory as it plans to remain anchored in prime housing as the low-risk base. Non-prime and affordable segments will be used to enhance returns without increasing the overall portfolio risk,” he says.

Diversification plans

While the prime segment remains the bedrock—accounting for over 55% of the portfolio—BHFL is planning to diversify. It has set sights on near-prime and affordable housing segments in Tier II and III cities. Central to this strategy is Sambhav Loans—an affordable housing finance product launched in July 2024 for first-time buyers with minimum monthly income of Rs 10,000.

Atul Jain, Managing Director, BHFL, says the company is shifting from its initial focus on prime lending to establish a presence across all market segments. However, higher-risk segments will have a lower weight in the portfolio, he says. “The immediate strategy focuses on expanding the Sambhav Loan vertical. The company aims to double the share of these loans within the next 12-15 months.”

The Digital Edge

The Bajaj Group’s financial services businesses are known for using technology—including now AI—to drive efficiencies. BHFL has seen its operating expenses as a share of net total income improve significantly from 29.2% in FY22 to just 21.1% in the first half of FY26. Jain says BHFL is a completely tech-enabled company where 96% customers are onboarded digitally.

In an industry traditionally burdened by extensive paperwork, BHFL has moved nearly all operations digitally. “We strive to eliminate paper wherever possible. Even beyond onboarding, 96% loan sanctions and agreements are done digitally, except in cases where customers specifically choose to opt out,” says Jain.

BHFL also claims that nine out of 10 applicants receive their loan sanction in less than 24 hours, one of the fastest turnaround times in the Indian market.

As BHFL matures, its ambitions are growing too. The company’s net interest margins remained stable at 3.3% in FY25, providing a healthy cushion for future expansion. With a focus on prime lending as the foundation and affordable housing as its next focus area, it is poised to challenge the market leader.

@NindakBaba