Bajaj Housing Finance Limited (BHFL or the Company), a subsidiary of Bajaj Finance Limited, is a registered non-deposit taking housing finance company with the National Housing Bank (NHB) since September 2015 to carry on the business of housing finance. It commenced lending operations in July 2017 and has crossed the Assets Under Management (AUM) milestone of Rs 1,40,000 crore during the year.
BHFL is categorised as an Upper Layer NBFC (NBFC-UL) under the Scale Based Regulations issued by the Reserve Bank of India (RB). It has also been listed on two major stock exchanges, i.e. the National Stock Exchange of India Ltd and the BSE Ltd since September 2024. The Company is regulated by the RBI, the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority of India (IRDAI) and supervised by the NHB.
Macroeconomic Overview
Financial Year 2026 (FY2026) witnessed geopolitical volatility and uncertainty that were carried forward from the ongoing Russia-Ukraine war. These were further intensified by the US tariff chaos during the first nine months of the year and resulted in unforeseen demand of safe heaven assets with much sharper run up in commodities before cooling down in the fourth quarter. Such volatility was further fuelled in March 2026 with the advent of the West Asia crisis - impacting crude oil pricing, energy and gas imports due to supply chain disruption at the Strait of Hormuz. This crisis does not seem to be abating at the time of writing; and it will certainly have ripple effects on ancillary industries and the global growth outlook.
The global macroeconomic events during the year - especially the steep imposition of US tariffs on India for a period of time impacted export linked industries like textile, leather, organic chemicals, etc. Nevertheless, such global chaos period led a reform-oriented response from the Government of India to step up with multiple initiatives, such as bilateral trade deals with various countries, simplification of the GST norms and reduction of GST rates under multiple categories.
Q4 FY2026 started with some green shoots through finalisation of a much-awaited trade deal between the European Union (EU) and India, which ought to aid export diversification. This was further sweetened by a trade deal between India and the US, leading to reduction in the higher US tariff rate of 50% to 18%, resulting in relief for Indian exporters.
The International Monetary Fund (IMF), in its April 2026 release of the World Economic Outlook projected global growth at 3.1% for calendar year (CY)2026 (which was lower than CY2025 rate of 3.4%) and 3.2% for CY2027. Global headline inflation is expected to witness increment from 4.1% in CY2025 to 4.4% in CY2026, with a reduction to 3.7% in CY2027.
The IMF projected Indias growth for 2026 and 2027 at 6.5% - which, as earlier, is significantly higher than other major economies and reflects the structural growth impetus happening in the country. Moreover, in April 2026, the IMF revised its 2025 growth rate upwards by 0.3% to 7.6% owing to better momentum in the third and fourth quarters.
In terms of our own estimates, the Second Advance Estimates released by the National Statistical Office (NSO) on 27 February 2026 incorporated a new series of GDP estimates with the base year being changed to 2022-23 which incorporates better benchmarking and additional data points. Based on these estimates, real GDP growth is estimated to grow by 7.6% for FY2026 compared to the FY2025 growth of 7.1%.
Real Gross Value Added (GVA) is estimated to grow at 7.7% for FY2026 versus 7.3% in FY2025. Current-year GVA was largely boosted by secondary sector growth of 9.1% and tertiary sector growth of 9%. However, primary sector growth is muted and estimated at 2.6% for FY2026.
In terms of quarterly trends, real GDP growth was ahead on Y-o-Y basis for second and third quarters of FY2026. Growth in the first quarter (April to June) was 6.7%; this rose to 8.4% in Q2 FY2026 (July - September) and then witnessed slight dip in Q3 to 7.8%. Real GVA growth rate for the current financial year has been also higher in Q2 and Q3 versus the same quarters of previous year. Real GVA growth rates were 7.0% in Q1 FY2026; it increased to 8.6% in Q2; followed by a slight moderation in Q3 to 7.8%.
On consumption front, both Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) are estimated to witness growth rates above 7% in FY2026. The PFCE growth rate expectation for FY2026 is 7.7% and GFCF growth rate is projected to be 7.1%.
Indias current account deficit (CAD) narrowed sequentially to $13.2 billion in Q3 FY2026 (1.3% of GDP) versus a revised deficit of $14.1 billion in Q2 FY2026 (1.5% of GDP). On a Y-o-Y basis, it increased from $11.3 Bn in Q3 FY2025. Imports witnessed growth of 8.6% to $205.3 billion; exports grew 1.7% to $111.7 billion; and net services receipts were at $57.5 billion as against $51.2 billion a year earlier.
During first nine months of FY2026, the consumer price index (CPI) remained well below 3.5%. The RBI has projected CPI inflation for FY2026 at 2.1% with Q4 FY2026 at 3.2%. Additionally, NSO released CPI with new base year of 2024, where CPI inflation for January 2026 was 2.74% which inched up to 3.21% for February 2026.
The RBI announced several measures to boost consumption through multiple policy rate cuts starting from February 2025. The RBI announced three policy rate cuts during the year: by 25 bps in April 2025; followed by 50 bps in June 2025; and an additional 25 bps in December 2025. Overall, the policy rate reduced from 6.25% to 5.25%.
Though policy rate cuts were intended for consumption and liquidity boost, this decreasing interest rate scenario also intensified margin pressure for floating interest rate linked loans, primarily for housing industry which was already witnessing heightened competition and aggressive pricing from banking sector.
Industry Overview
The Real Estate Sector and Housing Finance Companies
The housing sector remains an integral part of the Indian economy owing to its interlinkages with various ancillary industries supporting growth as well as employment opportunities. It continues to remain resilient thanks to improving mortgage penetration, rising per capita income and formalisation of the sector after concerted implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA).
Moreover, the sector has benefited from the Governments continued focus on various structural initiatives such as Housing for All, Pradhan Mantri Awas Yojana (PMAY 2.0), SWAMIH fund for stalled projects along with higher budgetary allocations for housing related schemes.
The residential real estate sector which had a good run post-Covid in terms of absorption as well launches across the top-8 markets has started witnessing some consolidation with launches and absorption slightly moderating. Presently, the sector is witnessing a transition from volume-led to value-led growth, thanks to an increase in demand for premium and luxury housing, with new launches significantly favouring these two segments.
Commercial real estate continued to reflect Indias growth story with sustained investment flows, portfolio expansion by global and domestic firms and strong trajectory of global capability centres (GCC) leasing thus driving both supply as well as absorption. With absorption outpacing supply, vacancy levels also moderated further. Overall, this sector is expected to remain resilient with corporate and GCC expansion.
The housing finance sector has also shown resilience and growth with HFCs playing an important role in aiding last mile financing. India continues to witness improvement in the ratio of housing loan penetration to GDP - from 8% in FY2015 to 11.23% in FY2025. There are some additional data points reflecting overall housing finance sectors strength:
• As per latest RBIs sectoral deployment of bank credit, the housing portfolio of Indias Scheduled Commercial Banks (SCBs) grew by 11% from Rs 29.78 lakh crore (as on 7 March 2025) to Rs 33.05 lakh crore (on 28 February 2026).
• The overall portfolio of individual housing loans grew by 9.5% on Y-o-Y basis from Rs 33.53 lakh crore in September 2024 to Rs 36.70 lakh crore in September 2025. Within this portfolio growth, as of September 2025, the Public Sector Banks (PSB) grew 14% followed by Housing Finance Companies (HFCs) at 8.1% and Private Sector Banks (PVB) at 4.7%.
• As of September 2025, individual housing loan portfolio continued to have higher share of PSB at 45.7%, followed by PVB at 35.9% and HFC at 18.4%.
• National average of outstanding individual housing loans to Gross State Domestic Product (GSDP) stood at 10.85% as of September 2025. The concentration mix was: 15.85% in the western region; 12.19% in the south; 8.55% in the north; and 4.84% in the east. (Source: NHB Report on Trend and Progress of Housing in India, 2025)
Regulatory Change
The RBI continued its overarching strategic direction to protect consumer interests, fair practices and build resilience within the financial sector with implementation of various measures to enhance transparency and strengthen stakeholders in the sector. The RBI focused on harmonising regulations across lending entities to ensure financial stability, improve oversight and seamless customer experience. It issued several regulations and guidelines throughout the year which include:
• Consolidation of Regulatory Instructions: To ease compliance for the Regulated Entities (REs), the RBI undertook a fundamental reorganisation of regulatory instructions. This comprehensive exercise involved consolidation of more than 3,500 existing directions, circulars and guidelines into 238 function-wise Master Directions spanning 11 types of regulated entities, including NBFCs.
• Framework of Co-lending Arrangements: To enhance the potential of lending arrangements in catering to the credit needs of wider segments in a sustainable manner, comprehensive revised directions on Co-Lending Arrangements were issued during the year with an objective of providing specific regulatory clarity on the permissibility of such arrangements, while addressing prudential and conduct-related aspects.
• Pre-payment Charges on Loans: The RBI released Pre-payment Charges on Loans Directions, 2025 in July 2025 applicable for Upper Layer NBFCs directing no pre-payment or foreclosure charges levy on floating-rate loans taken by individuals or Micro and Small Enterprises on new loans sanctioned or renewed from 1 January 2026 onwards.
• Project Finance Directions: The RBI released Project Finance Directions in June 2025. These were issued to provide a harmonised framework for financing projects in infrastructure and non-infrastructure sectors (including commercial real estate and commercial real estate - residential housing) by regulated entities. These came into effect from 1 October 2025. These directions also lay down the revised regulatory treatment upon change in the Date of Commencement of Commercial Operations of such projects.
Additionally, the NHB issued circulars/advisories to HFCs on mandatory offering a choice of two insurance companies to borrowers, implementation of 1600 series numbers for service and transactional calls, as well as preparedness for adherence to BIS IS 17802 standards in case of products and services based on Information and Communications Technology provided by the housing finance companies.
In FY2026, the NHBs approach shifted from volume-led refinance to quality-controlled refinance. This effectively redirects refinance towards genuine housing creation, re-prioritisation of refinancing toward affordable and underserved segments, deeper affordable housing penetration, customer and borrower protection, customer-protective housing finance and institutional strengthening as well as core long-tenor finance to the Affordable Housing Finance Companies.
Being a regulatory compliant organisation, BHFL adheres to these regulations to the extent applicable to the Company along with various supervisory directions issued by the NHB.
The Company
BHFL is one of the largest housing finance companies with diversified mortgage product suite for retail as well as commercial clients. It is focused on building sustainable mortgage business with scalable balance sheet and low-risk business model. The Companys full mortgage product suite spans across:
• Home Loans;
• Loans Against Property;
• Lease Rental Discounting;
• Developer Financing and
• Others, covering non-collateralised loans.
Under its retail product suite, BHFL caters to all customer types, i.e. salaried, self-employed and professionals across all customer segments (prime as well as non-prime) by offering all transaction types involving purchase, resale, self-construction and balance transfer. The Company covers the entire spectrum of retail mortgage products.
In the commercial product suite, the Company offers lease rental discounting (LRD) on commercial, retail, warehousing and industrial properties to commercial clients spanning across developers, high net worth individuals (HNI) and corporates; and its developer financing (DF) product covers both residential as well as commercial construction finance offering to real estate developers. This product suite covers the entire spectrum of commercial real estate needs from greenfield to stabilised assets.
Prime home loans and LRD are the two anchor products of the Company which deliver scale as well as low risk with higher mix of low-risk salaried customers in home loans portfolio coupled with marquee and good rated customer mix in LRD portfolio spanning across REITs, sovereign wealth funds, large corporates and large commercial developers - all of which enable to maintain a lower Gross NPA at the overall level.
The Company enjoys highest credit rating of AAA/stable for its long-term debt programme and A1+ for its short-term debt programme from CRISIL and India Ratings. These ratings enable the Company to diversify its funding sources and optimise its borrowing cost. BHFL maintains healthy capital adequacy with capital to risk- weighted assets ratio (cRAR) ratio - at 22.46% as of 31 March 2026.
Building a sustainable mortgage business within well-defined strategic construct
The Companys strategic construct enables it to build a scalable and low-risk mortgage business on the back of sustainable business model. It has five important pillars:
• Scale: Building scalable balance sheet through prime housing and LRD acting as anchors for delivering scale.
• Low risk: Maintaining low risk orientation through robust underwriting and portfolio monitoring practices with prime housing and LRD acting as anchor products to deliver low risk.
• Reasonable return: Optimising the portfolio mix between scale building and return enhancing products (developer financing, loan against property and non-prime home loans) and customer segments for reasonable overall return.
• Full mortgage product suite: Offering all mortgage products and transaction types to all customer types and segments.
• Diversified borrowing: Balancing diversified mix of borrowings to support longer tenor lending.
Sourcing strategy
The Company follows omnichannel sourcing across products complemented by micro-market approach to enhance sourcing funnel.
Omnichannel sourcing has a two prolonged strategy of leveraging both direct and indirect sourcing models for diversification as well as reducing concentration risk. The Companys direct sourcing model includes developer ecosystem (developer finance relationships and large approved project financier base), self-sourcing, digital partners and other digital assets with an intent of improving penetration across these channels. The indirect sourcing model spans across a wide array of intermediaries including channel partners, connectors, direct selling agents and aggregators with field teams focusing on enhancing the wallet share across each intermediary while also onboarding new partners.
The micro market model segregates each location into multiple micro markets for sharper focus, thereby driving market share increase at each micro market and thus at the location level.
Commercial businesses follow largely relationship-driven sourcing strategy. These also leverage indirect sourcing to a certain extent through wealth management companies and international property consultants.
To optimise field productivity and have sharper execution while catering to the differentiated nuances of each customer segment, the Company has aligned its internal structure across three business verticals based on the operating customer segments:
• Retail (Prime): Dedicated front-end teams for direct as well as intermediary sourcing channel serving to the prime customer segment for home loans and loan against property (LAP) supported by dedicated enabling functions (credit through centralised hubs, collateral, operations through regional hubs and risk policy).
• Retail (Near Prime and Affordable Housing): The Company incubated this new vertical last year and has thus expanded customer segmentation from prime to also near prime and affordable customers under strategic business unit (SBU). This vertical has a dedicated front-end team and enabling functions, i.e. credit (centralised / regional hubs), collateral and operations (regional hubs) with the centralised credit hub for near prime and regional credit hubs for the affordable customer segments.
• Commercial: This vertical caters lease rental discounting and construction finance products to commercial clients by dedicated front-end teams having subject matter expertise and enabling teams.
Dedicated front end teams are intended to accelerate growth within target customer segments with differentiated sourcing strategy while dedicated enabling functions for each business vertical strengthen the underwriting and asset quality while catering to segment specific nuances.
To further drive operating leverage and enable multi-vertical growth, the support functions are horizontal across all these verticals including debt management, risk monitoring, treasury, IT, finance, legal, HR, compliance, marketing, etc. This structure enables operating efficiency through the years while having strategic investments in new products like the near-prime and affordable (or Sambhav) housing.
At the centre of all these structures, multiple competitive differentiators of the Company are leveraged to source customers through doorstep service, tailormade solutions catering to the customers varied needs, with wider distribution network and digital processes from onboarding to loan disbursement - which eliminate multiple paper copies and enhancing transparency.
Growth levers to enable medium term growth
The Company has multiple growth levers enabling it to achieve home loans origination market share of 5% over the medium term with Sambhav loans contributing 20% of the overall home loans origination while maintaining steady growth in our commercial product suite. These are:
• Deepening Prime Housing across top six locations: Expand distribution network of developer ecosystem and intermediaries while segmenting these locations into focused micro-markets to accelerate customer acquisition and to drive deeper market share penetration.
• Expanding non-top six locations: Targeting higher incremental acquisition from non-top six markets to act as an incremental growth lever for prime housing.
• Widening presence through Sambhav home loans: Strategic investments in building Sambhav loans to expand addressable market share in near prime and affordable customer segment, thereby enhancing yield for home loans while acting as a natural hedge and providing stability to net interest income compression from the highly competitive prime home loans.
• Enhancing customer wallet share in LRD: Building long term partnership with marquee customers to establish preferred lender status and enhancing wallet share through deeper engagement while expanding customer funnel through onboarding of new high quality commercial relationships.
• Scaling construction finance: Continue to build granular portfolio of developer finance to protect margins as well as future growth funnel for retail home loans and complementing this growth engine by increasing contribution from emerging markets.
Performance Highlights, FY2026
• Assets under management (AUM) grew 23% to Rs 1,40,706 crore.
• Net interest income rose by 25% to Rs 3,752 crore.
• Net total income (NTI) increased by 23% to Rs 4,391 crore.
• Operating expenses (Opex) growth of 16% to Rs 867 crore.
• Opex to NTI ratio improvement from 20.9% in FY2025 to 19.7% of FY2026.
• Pre-impairment operating profit witnessed growth of 25% to Rs 3,524 crore.
• Impairment on financial instruments was Rs 191 crore as against Rs 58 crore in FY2025.
• Profit before tax (PBT) grew 20% to Rs 3,320 crore.
• Profit after tax (PAT) increased by 18% to Rs 2,560 crore.
• Healthy capital adequacy with CRAR at 22.46% as of 31 March 2026 and Tier-1 ratio was 22.01%; both well above regulatory norms.
• ROA was steady at 2.3% and ROE at 12.1% for FY2026.
• Overall capital base stood at Rs 22,523 crore as of 31 March 2026.
Business Update
The year witnessed multiple policy rate cuts which started from February 2025 with cumulatively 100 bps reduction till the end of FY2026 leading to repo rate moderation from 6.25% in April 2025 to 5.25% till March 2026. While the disbursement momentum has been good during the year, decreasing interest rate scenario creates pressure on AUM growth and NIM in case of floating rate linked mortgage loans with portfolio rate transmission, lower rate acquisitions and higher portfolio attrition in prime housing driven by heightened competitive intensity.
Additionally, the residential real estate market also witnessed moderation in launches as well as absorption with visible signs of consolidation in the sector towards premium and luxury housing. However, inventory overhang across top markets remained in a comfortable range with disciplined launches by the developers. Commercial real estate sector had another strong year with improvement in supply as well as absorption also aided by comfortable vacancy levels.
Though the housing finance market has witnessed competitive intensity in recent years, BHFL continued its growth momentum and further improved its market share in overall home loan originations at industry level. The Company witnessed growth in both portfolios - retail as well as commercial with overall AUM growth of 23% on Y-o-Y basis and AUM stood at Rs 140,706 crore as of 31 March 2026.
The Company witnessed decent growth across portfolio where home loans grew 18%, LAP by 24%, LRD by 44% and developer finance by 13% on Y-o-Y basis which helped it to maintain a well-diversified AUM mix.
With respect to overall portfolio mix, home loans share stood at 54.1% followed by LRD at 22.4%, DF at 11.5% and LAP at 10.8%. Overall disbursement momentum picked up during the year with 27% Y-o-Y growth across 226 branches.
BHFL continues to diversify its borrowing mix with inclusion of new borrowing sources like pass through certificates to enhance funnel for longer tenor borrowings to support longer tenor lending. The overall borrowing mix was dominated by money market instruments with non-convertible debenture (NCD) at 43.9%; followed by bank borrowings at 40.8%; NHB refinance at 10.0% and commercial paper (CP) at 5.3% as of 31 March 2026.
The Company continued to have adequate liquidity buffer during the year which stood at Rs 2,662 crore as of 31 March 2026. The liquidity coverage ratio stood at 146.10% for the fourth quarter and 152.52% as on 31 March 2026 as against regulatory requirement of 100%.
The Companys operating efficiencies continued to progress on the back of improved adoption of digital initiatives, leaner mid and back office structures and common support functions. Thus, opex to NTI improved 120 basis points from 20.9% in FY2025 to 19.7% in FY2026 while the Company continued its investments in non-top six locations, near prime and affordable verticals.
BHFL maintained healthy asset quality across portfolios with overall GNPA at 27 bps as of 31 March 2026 as against 29 bps as of 31 March 2025. This is one of the lowest GNPA amongst large HFCs.
The Company continued to have higher mix (84% as of 31 March 2026) of low-risk salaried customer segment in home loans portfolio coupled with marquee and well rated customer mix of 67% in LRD portfolio spanning across REITs, sovereign wealth funds, large corporates and large commercial developers - all of which enabled lower GNPA and credit cost.
Home Loans
Home loan is an anchor product of the Company for delivering scale as well as low risk outcomes from prime housing. The Company offers home loans for all transaction types namely purchase, resale, balance transfer and self-construction - thus covering the entire spectrum of home loan needs of all customer types (salaried, self-employed and professionals) through its omnichannel sourcing strategy.
It leverages the developer financing ecosystem to source under construction home loans from developer financing relationships coupled with approved project finance base of over 9,400+ projects which enables the Company to fast-track loan processing time for under construction, purchase transactions.
Home loans are offered across 182 locations with an average loan value of Rs 48.4 lakh and average customer salary of Rs 15 lakh. Within home loans portfolio, salaried and professional customer segment comprises 84%. The Company offers home loans to both prime as well as non-prime customers. To have a dedicated focus and understanding the differentiated needs of non-prime customers, the Company operates through a dedicated SBU of Sambhav loans which also act as a return enhancer for the Company.
Overall home loans AUM grew by 18% on Y-o-Y basis, reaching Rs 76,055 crore as of 31 March 2026.
Sambhav Housing: Expanding BHFL reach to near prime and affordable customers.
The Company incubated a dedicated business vertical for expanding its addressable customer segment to near prime and affordable customers through an SBU. This SBU is currently operational across 73 urban locations and 72 tier-4 / rural locations. It is shaping up well in terms of current monthly disbursement run rate.
This business has two parts: (i) near prime housing, and (ii) affordable housing - each having separate differentiators and business approaches as shown below:
| Particulars | Near Prime | Affordable |
| Operating markets | Top 36 markets | Deeper geographies of top 36 markets & tier-4/rural locations |
| Target average ticket size (ATS) | 40 - 60 Lakh | 15 - 35 Lakh |
| Target Yield | 9%- 11% | 11% - 13% |
| Front end team structure | Dedicated team | Dedicated team |
| Credit structure | Centralised hubs | Regional hubs |
| Operations structure | Regional hubs | Regional hubs |
Dedicated teams are also being deployed to diversify the sourcing funnel from existing B2C (intermediary sourcing) channel to B2B (developer ecosystem), direct to customer and LAP. Strategic investments in this SBU shall continue over the next couple of years to strengthen the structure and drive geographical expansion.
Loan Against Property
LAP product acts as a return enhancer in the Companys overall strategic construct. The Company offers assessed income backed lending to self-employed, professionals and salaried customers against their residential as well as commercial properties. It leverages both sourcing channels i.e. intermediaries and direct-to-customer across 74 locations with average loan value of Rs 88 lakh.
BHFL offers this product to diverse customer base from prime customers to near prime and affordable customer segment. In terms of customer segmentation mix, a higher share comes from self-employed customers at 79% of the overall portfolio.
This product has higher contribution of relatively low-risk self-occupied residential properties which constitute approximately 70% of the portfolio. As of 31 March 2026, LAP AUM grew by 24%, reaching Rs 15,191 crore.
Lease Rental Discounting
LRD is the second anchor product of the Company which delivers scale, low risk and reasonable return. BHFL offers this product across stabilised assets including office space, retail, warehousing and industrial properties with focus on grade A commercial properties. This product is offered across 17 locations with an average loan value of Rs 126 crore.
LRD has a marquee and diversified customer base including sovereign wealth funds, real estate investment trusts (REITs), private equity, MNC funds, large corporates and large commercial developers who contribute some 67% of overall LRD portfolio. It has diverse lessee base including MNCs and large Indian corporates with relationship-driven sourcing and servicing model.
This product delivers low risk with its dual security of cash flow and collateral backed exposures while having zero collateral execution risk. These exposures are backed by an escrow mechanism for rental cash flows being received from the lessees. The Company has a dedicated portfolio monitoring team for periodic tracking of rentals, vacancy trends and portfolio performance.
As of 31 March 2026, lease rental discounting AUM stood at Rs 31,531 crore, representing a year-on-year growth of 44%.
Developer Finance
Developer / Construction finance plays an important role in expanding the funnel for retail home loans and enhancing returns for the Company. BHFL offers construction finance product to real estate developers through micro-market approach where these developers are evaluated based on their proven track record of ability to build and sell in their respective micro-market along with vintage and financial performance.
The Company follows relationship driven sourcing model across 15 locations with an average loan value of Rs 54 crore. The construction finance book spans 885 projects across 601 developers. It is, thus, very granular which reduces the concentration risk for the product. Moreover, this product expands the sourcing funnel for subsequent retail home loan sourcing from these developer relationships.
Exposures under this product have pre-defined milestones linked to stage of construction, sales and collection for further release of any tranche which minimise execution risk. These milestones are tracked periodically by an underwriting team as well as dedicated portfolio monitoring team to assess any emanating concern area and implement corrective action.
These exposures also have an escrow mechanism for project cash flows with pre-defined sweep structure which reduces the principal outstanding on a periodic basis even when a project is under principal moratorium period. Additionally, interest servicing happens from day 1 during the principal moratorium period thus providing further security on the exposure. Dedicated portfolio monitoring team tracks the escrow process along with periodic project visits to understand the on-ground veracity of underlying projects.
Developer financing AUM grew 13%, reaching Rs 16,226 crore as of 31 March 2026.
Partnerships and Services
The Company is registered as a corporate agent with the IRDAI for distribution of life and health insurance products. BHFL offers life insurance, general insurance and health insurance to its customers in partnership with various financial service providers. It currently has partnership with five insurance companies to enhance insurance penetration and fee income for the Company.
Assets Under Management (AUM): Snapshot
Table 1 (a): AUM across major business verticals
(Rs in crore)
| Particulars | FY2026 | FY2025 | Change | AUM Mix |
| Housing loans (including top-ups) | 76,055 | 64,447 | 18% | 54% |
| Loan against property | 15,191 | 12,262 | 24% | 11% |
| Lease rental discounting | 31,531 | 21,913 | 44% | 22% |
| Developer finance | 16,226 | 14,346 | 13% | 12% |
| Other loans | 1,703 | 1,716 | (1%) | 1% |
| Total | 140,706 | 114,684 | 23% | 100% |
Table 1 (b): AUM as per regulatory criteria
(Rs in crore)
| Particulars | AR FY2026 | AUM FY2026 | AUM Mix FY2026 | AR FY2025 | AUM FY2025 | AUM Mix FY2025 |
| Housing loans | 63,840 | 65,448 | 47% | 52,946 | 54,541 | 48% |
| Non-Housing loans | 18,771 | 24,189 | 17% | 16,731 | 21,869 | 19% |
| CRE-residential housing | 13,196 | 13,196 | 9% | 11,837 | 11,837 | 10% |
| CRE | 27,938 | 37,783 | 27% | 17,999 | 26,437 | 23% |
| Total | 123,745 | 140,706 | 100% | 99,513 | 114,684 | 100% |
| IHL PBC%* | 50.45% | 51.72% | ||||
| Overall PBC%# | 60.88% | 63.28% |
* percentage of total assets towards housing finance for individuals.
# percentage of total assets towards housing finance.
Borrowings
As mortgage is a long-term asset business, it requires long-term liabilities to avoid ALM mismatch. Accordingly, BHFL maintains a balanced mix of longer tenor borrowings along with diversification of borrowing sources which includes term loans, money market instruments, and NHB refinance.
To further diversify its borrowing profile, in FY2026 the Company issued floating rate linked pass-through certificates (PTC). This new borrowing avenue helps it to reduce interest rate risk, as majority of its advances are floating in nature.
Overall borrowings grew from Rs 82,072 crore as of 31 March 2025 to Rs 1,03,704 crore as of 31 March 2026. As of 31 March 2026, BHFLs borrowing profile mix comprises following borrowing instruments:
• Non-convertible debentures (NCD): 44%
• Bank Borrowings: 41%
• NHB Refinance: 10%
• Commercial papers (CP): 5%
During FY2026, the Company raised Rs 15,623 crore from NCDs, Rs 16,825 crore from term loans, Rs 3,789 crore from NHB refinance and Rs 13,400 crore from CP. BHFLs bank borrowings are backed by relationships with 18 banks and within its bank borrowing mix, it has majority share of external benchmark linked interest rate loans thereby providing better transmission.
Assignment plays an integral part of the funding strategy due to replacement of fresh borrowings, ALM match and maintenance of PBC criteria through assignment of non-housing loans. Accordingly, the Company executes assignment transactions and continues to service these loan portfolios. Outstanding assignment portfolio as of 31 March 2026 stood at Rs 16,961 crore.
Investments
BHFL has a Board-constituted investment committee (IC) that oversees investments and ensures that the overall investment portfolio aligns with the Board-approved investment policy in terms of type of instruments, duration, investment capping, etc.
The Company remains focused on optimising returns while diversifying its investment portfolio and ensuring that these investments are being made in the highly liquid instruments to maintain adequate liquidity availability. The Company meets the regulatory Liquidity Coverage Ratio requirement by investing in high-quality liquid assets.
As of 31 March 2026, BHFLs investment portfolio (including cash and cash equivalents) stood at Rs 2,662 crore which is invested across treasury bills/government securities/SDLs (H 2,500 crore) and balances with banks (H 162 crore).
Table 2: Average return on investments
| Particulars | Average Yield (%) |
| Government Securities/ SDLs/ T-bills | 7.41% |
| Mutual Funds | 5.72% |
| Fixed deposit with banks | 5.43% |
| Overall Return | 6.83% |
Asset Liability Management (ALM)
BHFL has a three-tiered structure for oversight of its asset liability management which comprises Board-level Committee of Directors, a Management-level Asset Liability Committee (ALCO), and a sub-committee.
On a monthly basis, the Management-level ALCO reviews macroeconomic indicators impacting the sector and the Company, liquidity position, balance sheet growth, monitors various interest rate scenarios, liability maturities, and accordingly, guides the treasury team on fund raising and liquidity plans. It also reviews monthly asset liability mismatches to ensure there are no excessive concentrations or material imbalances on either side of the balance sheet while maintaining adequate liquidity to navigate a tight liquidity scenario. In addition to this, the Board-level committee also oversees the metrics pertaining to liquidity, interest rate and market risk on a periodic basis.
To manage liquidity risk, the Company has a liquidity risk management framework and Asset Liability Management policy. It maintains regulatory minimum daily liquidity in compliance with Liquidity Coverage Ratio (LCR) norms, by investing in high-quality liquid assets such as government securities, state development loans, treasury bills, and cash and bank balances.
Surplus liquidity above the prescribed LCR threshold is invested in liquid mutual funds, with oversight by the committee on regulatory LCR to ensure continued compliance and adequate liquidity. BHFL maintained an LCR of 152.52% as of 31 March 2026. This was well above the prescribed regulatory requirement of 100%.
To manage interest rate risk arising from floating and fixed rate linked assets and liabilities, BHFL uses the ALM framework by categorising these interest rate risk sensitive assets and liabilities into defined tenor buckets and then monitor these against board approved limits. Additionally, the Company manages interest rate risk arising from mismatch between fixed rate liabilities and floating rate assets through hedging instruments like interest rate swaps to convert fixed rate liabilities into floating rate liabilities.
Asset-liability mismatches are monitored across defined maturity buckets as per the RBI guidelines and the ALM policy framework. Inflows are classified based upon the behavioural analysis of loan portfolio - factoring historical trends of foreclosures and part payments while outflows are determined based on the contractual maturities of borrowings. Other assets and liabilities are categorised based upon historical patterns.
In terms of ALM position, BHFL has positive ALM position in 1-7 days, 8-15 days and 15-31 days compared to the extant RBI regulation which permits a negative ALM mismatch of up to 10%, 10% and 20% respectively.
The Company maintained positive ALM position with maturity period up to one-year bucket having cumulative inflow of Rs 47,622 crore and cumulative outflow of Rs 46,082 crore.
Table 3 gives the behavioural maturity pattern of BHFLs asset and liabilities.
Table 3: Behaviouralised ALM snapshot as on 31 March 2026
(Rs in crore)
| Particulars | 1 to 7 days (one month) | 8 to 14 days (one month) | 15 to 30/31 days (one month) | Over one month to 2 months | Over 2 months to 3 months | Over 3 months to 6 months | Over 6 months to one year | Over one year to 3 years | Over 3 years to 5 years | Over 5 years | Total |
| A. Inflows | |||||||||||
| Cash and investments | 8 | - | 192 | 4 | 7 | 69 | 2,388 | - | - | - | 2,668 |
| Advances | 1,403 | 554 | 1,448 | 2,730 | 2,637 | 7,561 | 13,433 | 37,949 | 21,885 | 34,145 | 123,745 |
| Other inflows | 2 | 150 | 1,002 | 4,006 | 3,482 | 2,435 | 4,111 | 10,724 | 6,767 | 9,118 | 41,797 |
| Total inflows | 1,413 | 704 | 2,642 | 6,740 | 6,126 | 10,065 | 19,932 | 48,673 | 28,652 | 43,263 | 168,210 |
| B. Cumulative total inflows | 1,413 | 2,117 | 4,759 | 11,499 | 17,625 | 27,690 | 47,622 | 96,295 | 124,947 | 168,210 | |
| C. Outflows | |||||||||||
| Borrowings repayment | - | 110 | 247 | 4,619 | 4,203 | 4,878 | 11,354 | 39,749 | 20,703 | 17,841 | 103,704 |
| Capital reserves and surplus | - | - | - | - | - | - | - | - | - | 22,523 | 22,523 |
| Other outflows | 956 | 568 | 2,356 | 2,074 | 1,903 | 4,376 | 8,438 | 8,986 | 5,883 | 6,443 | 41,983 |
| Total outflows | 956 | 678 | 2,603 | 6,693 | 6,106 | 9,254 | 19,792 | 48,735 | 26,586 | 46,807 | 168,210 |
| D. Cumulative total outflows | 956 | 1,634 | 4,237 | 10,930 | 17,036 | 26,290 | 46,082 | 94,817 | 121,403 | 168,210 | |
| E. Gap (A - C) | 457 | 26 | 39 | 47 | 20 | 811 | 140 | (62) | 2,066 | (3,544) | |
| F. Cumulative gap (B - D) | 457 | 483 | 522 | 569 | 589 | 1,400 | 1,540 | 1,478 | 3,544 | - | |
| G. Cumulative gap (%) (F/D) | 48% | 30% | 12% | 5% | 3% | 5% | 3% | 2% | 3% | 0% | |
| H. Permissible cum. gap (%) | (10%) | (10%) | (20%) |
Financial Performance
Table 4 highlights the financial performance for FY2026 vis-a-vis FY2025 and Table 5 gives the key ratios.
Table 4: Financials
(Rs in crore)
| Particulars | FY2026 | FY2025 | Change |
| Total income | 9,554 | 17% | |
| Interest and finance charges | 6,760 | 5,979 | 13% |
| Net total income | 4,391 | 3,575 | 23% |
| Total operating expenses | 867 | 747 | 16% |
| Pre-impairment operating profit | 3,524 | 2,828 | 25% |
| Impairment on financial instruments | 191 | 58 | 229% |
| Profit before exceptional items and tax | 3,333 | 2,770 | 20% |
| Exceptional items | 13 | - | |
| Profit before tax (PBT) | 3,320 | 2,770 | 20% |
| Profit after tax (PAT) | 2,560 | 2,163 | 18% |
| Other comprehensive income/ (expenses) | (19) | 11 | |
| Total comprehensive income | 2,541 | 2,174 | 17% |
| Earnings per share (EPS) basic and diluted, in H | 3.07 | 2.67 |
Table 5: Key Ratios
| Ratios | FY2026 | FY2025 |
| Net total income (NTI) to average loan receivable | 3.9% | 4.0% |
| Total operating expenses to Net total income (NTI) | 19.7% | 20.9% |
| Return on equity (ROE) | 12.1% | 13.4% |
| Capital to risk-weighted assets ratio (CRAR) | 22.46% | 28.24% |
| Tier I | 22.01% | 27.72% |
| Tier II | 0.45% | 0.52% |
| Gross NPA | 0.27% | 0.29% |
| Net NPA | 0.11% | 0.11% |
| Provisioning coverage ratio (PCR) | 59.8% | 60.3% |
| EPS - Basic (H) | 3.07 | 2.67 |
| Diluted (H) | 3.07 | 2.67 |
Risk Management and Portfolio Quality
As a lending company, BHFL is exposed to various risks including credit, market, liquidity, interest rate, operational, reputational and technology risks. For effective management of these risks, the Company has robust risk management practices and governance frameworks to identify, assess and mitigate the potential impact arising from these underlying risks. It continues to invest in processes, talent and technologies to advance its risk management capabilities. The Companys strong risk management structure works through dedicated underwriting units, horizontal risk monitoring unit, risk containment unit, operational risk management unit and debt management structure.
The Board of Directors has constituted a Risk Management Committee (RMC) comprising directors and senior management personnel as members, for overseeing the risk management policies, practices, strategies, risk tolerance levels and controls and to evaluate the performance of key metrics under various identified risks.
Pursuant to the Reserve Bank of India (Housing Finance Companies) Direction 2025, HFCs are required to perform internal assessment of capital requirement corresponding to the risk associated with the business which is required to be carried out through the Internal Capital Adequacy Assessment Process (ICAAP). Accordingly, the Board-approved ICAAP policy and ICAAP document have been institutionalised. This covers
the principles for identifying and evaluating various risks and assessing the additional capital required to mitigate such risks. The Company has concluded its ICAAP assessment for FY2026 in line with the Board approved policy.
Credit Risk
BHFL operates under a comprehensive Board-approved credit policy, supported by a defined delegation matrix that outlines approval authorities separately for retail and commercial product underwriting. In addition, it has product-specific due diligence frameworks that guide segment-wise credit assessment, legal and technical scrutiny and documentation standards. These structured policies enable consistent evaluation of customer profiles while effectively identifying and mitigating inherent risks.
The Companys centralised / regional in-house credit appraisal teams ensure uniformity in decision-making, enhanced operational efficiency and faster approval turnaround time. The underwriting process is strengthened by digital tools and modern assessment enablers, including the Account Aggregator framework, which provides a more holistic and data-driven understanding of customer financial behaviour. These initiatives collectively support more accurate credit decisions, improved transparency and quicker processing.
In addition to underwriting, there are dedicated portfolio monitoring units for retail (prime), retail (non-prime) and commercial products. These units regularly review portfolio performance, conduct through-the-door monitoring, assess early warning signals to detect emerging concern areas and deviations from stated asset quality parameters through analytics and automated reports and, accordingly, recommend preventive and mitigation measures. The retail portfolio monitoring team monitors product wise key indicators, including portfolio health, bounce rates, repayment trend and gross NPA to quickly assess probable risks and implement mitigation measures along with policy improvement.
For commercial portfolio monitoring, dedicated units track the escrow mechanism for project cash flows and rentals; monitor various milestones linked to various stages of construction; sales and collection in construction finance along with leasing and vacancy trends in LRD portfolio. Additionally, the teams conduct periodic project visits to assess on-the-ground veracity of funded projects, which is then complemented by Management interaction. There is an annual review mechanism of these commercial transactions to understand the evolving changes as per current environment and, where needed, recommend preventive measures.
To prevent fraud and connivance risks between internal or external stakeholders, the Company has a separate risk containment unit which continuously monitors various system-based triggers and early warning signals emerging from exception reports to perform detailed examination of flagged cases prior to disbursement.
These automated triggers are updated frequently to incorporate new learnings. Moreover, BHFL has enabled its employees and partners to report any suspicious transaction which then undergoes detailed review by the risk containment unit.
As the Company is expanding its presence in the near prime and affordable housing portfolio, it has started taking guarantee cover under Credit Risk Guarantee Fund Trust for Low Income Housing governed by Ministry of Finance for its affordable housing portfolio. To an extent, this acts as an additional risk mitigant.
The Companys healthy asset quality and lower GNPA underscore the strong underwriting practices and robust portfolio monitoring - as reflected in the following indicators:
• As of 31 March 2026, GNPA improved by 2 bps on Y-o-Y basis and stood at 27 bps while net NPA stood at 11 bps. BHFL has one of the lowest GNPA among large players in the HFC industry.
• Loan losses and provision for FY2026 was Rs 191 crore versus Rs 58 crore for FY2025.
• The Company holds macro-overlay provision of Rs 29 crore as on 31 March 2026.
• It has healthy provisioning coverage ratio at ~60% for stage-3 assets as of 31 March 2026.
Table 6: Stage wise assets
(Rs in crore)
| Particulars | Exposure at Default (EAD) | Expected Credit Loss (ECL) | ECL/EAD (%) | EAD Mix (%) |
| Stage 1 | 1,23,692 | 401 | 0.32% | 99.37% |
| Stage 2 | 453 | 132 | 29.11% | 0.36% |
| Stage 3 | 330 | 197 | 59.77% | 0.27% |
| Total | 1,24,475 | 730 | 0.59% | 100.00% |
Table 7: Robust product wise asset quality
(Rs in crore)
| GNPA | GNPA | NNPA | NNPA | |
| Particulars | As at 31 March 2026 | As at 31 March 2025 | As at 31 March 2026 | As at 31 March 2025 |
| Home Loans | 0.35% | 0.34% | 0.14% | 0.13% |
| Loan Against Property | 0.46% | 0.65% | 0.21% | 0.31% |
| Lease Rental Discounting | - | - | - | - |
| Developer Finance | 0.03% | 0.05% | 0.00% | 0.00% |
| Others | 1.11% | 0.95% | 0.19% | 0.21% |
| Total | 0.27% | 0.29% | 0.11% | 0.11% |
Market Risk
In line with the Board-approved policy, BHFL invests its surplus funds in various instruments that are subject to market risk. To mitigate such risk, BHFLs investments include treasury bills, central and state government securities, liquid funds and short-term deposits with banks, all of which are recognised liquid instruments best suited to maintain adequate liquidity and minimise market risk. The Company manages duration of these investments according to the interest rate environment to minimise the impact of price fluctuation in the fair value of such investments. The Investment Committee reviews the portfolio on a monthly basis. For market risk management, risk assessment of investments is done through modified duration and PV01 tools which is also reviewed each month by the Investment Committee.
Liquidity Risk
As per the RBI guidelines, BHFL has a Board-approved liquidity risk management framework and ALM policy to manage liquidity risk. The Asset Liability Committee (ALCO) reviews the structural liquidity and dynamic liquidity statements to ensure that there are no material gaps beyond regulatory and the Board-approved limits or excessive concentration in the balance sheet. Mismatches between assets and liabilities across time buckets are monitored, and the Company maintains adequate liquidity, as evidenced by a higher Liquidity Coverage Ratio (LCR) of 152.52% vis-a-vis the regulatory requirement of 100%, as of 31 March 2026.
Interest Rate Risk
BHFL is exposed to interest rate risk on investments as well as loan assets and liabilities. It has a diversified borrowing mix, including term loans from banks, non-convertible debentures, commercial papers and NHB refinance, spanning across various interest benchmarks and maturity profiles, which exposes the Company to interest rate risk.
Interest rate fluctuations can arise from multiple internal factors such as maturity profile, product composition, mix between fixed and floating borrowings or external factors such as macroeconomic developments, regulatory impact, and competitive intensity. To assess interest rate sensitivity on assets and liabilities, BHFL uses Duration Gap Analysis, which is also reviewed by the ALCO on a monthly basis.
Operational Risk
The Company manages its operational risk based on its Board-approved Operational Risk Management (ORM) Policy. This is further elaborated in the section Operational Risk Management.
Reputational Risk
The centralised service team continuously monitors customer requests and escalations on its CRM solution, social media and regulatory channels to provide end-to-end resolution for a seamless customer experience and to avoid reputational risk to the Company.
BHFL has also strengthened its digital reputation management framework through Online Reputation Management processes, enabling automated ticket creation and response mechanisms to track and manage brand mentions across digital platforms.
Technological Risk
BHFL mitigates technological risk through a three-tiered governance structure over its IT landscape consisting of the: (i) IT Strategy Committee, (ii) IT Steering Committee, and (iii) Information Security Committee.
It has well-defined policies and procedures for technological risk mitigation comprising Information Technology Policy, Information Security Policy, Cyber Security Policy, Cyber Crisis Management Plan, Business Continuity Policy and Information Security Standards and Procedures. These have been designed and aligned with several standards and regulations including directions from the NHB, the RBI, the IRDAI along with the ISO 27001:2022 standard.
The Company has implemented robust information security measures to address potential technology risks like cyber-attacks on IT infrastructure, data breaches, various forms of phishing and social engineering, malware, distributed denial of service (DDoS) attack, etc. To manage and mitigate cyber and information security risks, BHFL has following controls across multiple layers:
• Deployment of IT infrastructure on cloud provides high availability across multiple availability zones which is complemented by periodic DR drill the and backup restoration exercises to assess resilience capabilities.
• Web Application Firewall (WAF) is implemented across all public facing applications to safeguard against various attacks such as DDoS, SQL-injections etc. with additional protection to defend applications from attacks using BOT.
• Infrastructure components are hardened as per the published Centre for Internet Security (CIS) standard benchmarking.
• Endpoint network is secured using Zero Trust Network and Virtual Private Network (VPN) along with implementation of Network Access Control (NAC) for LAN and Wi-Fi to restrict external laptop connection to BHFL network.
• Managed Endpoint Detection and Response (MDR) on servers and endpoints helps to detect and prevent any malicious activity. For critical users, ransomware proof endpoint backup is implemented in addition to encryption of all laptops hard disks.
• Governance of all administrative access of infrastructure is through Privileged Access Management (PAM) solution along with Multi Factor Authentication (MFA) for critical applications and infrastructure login.
• 24x7 security operations centre (SOC) monitoring to monitor and respond to security events and all network devices monitoring by 24x7 Network Operations Centre (NOC).
• Cloud Security Posture Management (CSPM) Solutions is used for continuous monitoring of security posture of cloud infrastructure.
• Empanelled reputed Threat Intelligence and Digital Footprint monitoring platforms continuously monitor the Companys external presence. Proactive mitigation steps are implemented as per advisories received from CERT-IN for threat intelligence feed.
• Information security, cyber security and phishing awareness trainings are imparted along with internal phishing simulation activities to identify red flags and regular awareness emails/SMS to employees/ customers.
• The Company has a comprehensive Cyber Insurance coverage as a component of its risk-mitigation strategy.
Debt Management
In line with the strategic construct of low-risk balance sheet, the Company has a structured and robust debt management framework which is an integral part of portfolio management strategy. This framework enables improved collection efficiency, lower delinquency rates and better asset quality through a dedicated in-house debt management team.
To enhance convenience and faster processing, it provides multiple digital payment options to customers including NEFT, RTGS, UPI, etc. for loan instalments. The Company continues to focus on non-intrusive methods for its debt management through digital reminders and a soft debt management approach. This starts with customer awareness through multiple digital reminders for upcoming instalments before the monthly due date which enables customers to maintain sufficient account balance and avoid unintentional defaults impacting their credit history. This approach is further complemented by a touch-free debt management unit which connects with overdue customers and enables them to resolve their overdue payments.
BHFL follows a three-tier debt management structure for improved efficiency, sharper focus on delinquent account resolution and an appropriate debt management approach based on the stage of the customer:
(i) current month outstanding team, (ii) early delinquent customer team and (iii) NPA and write-off customer segment team. Based on the customer repayment behaviour and cohort analysis, a centralised team allocates overdue customers to the most suitable channel based on resolution efficiency between touch-free debt management unit and field teams. With introduction of debt management for the initial 12 months sourcing through the sales team, a dedicated debt management team focuses on stressed customers for resolution of early delinquent and NPA customers while supporting field business teams for any stressed case in the initial 12-month sourcing.
During engagement with customers either through touch free or through field, the Company focuses on adherence to internal as well as regulatory guidelines, code of conduct and fair practice code for seamless customer experience. This debt management framework is also supported by a dedicated legal framework enabling faster resolution of delinquent and NPA customers through customised legal notices, repossession notices, arbitration notices, enforcement action under the SARFAESI mechanism along with auctioning of repossessed properties.
For debt management of its commercial portfolio, the Company follows relationship-driven model for sourcing as well as debt management to maintain consistency and single point of contact for the customers.
Digitalisation
BHFL continues to focus on digital initiatives to enhance operational efficiency, strengthen process governance and provide seamless and transparent customer experience. Through continuing investments in digital infrastructure, platform enhancements and intelligent automation, BHFL remains committed to strengthen its digital ecosystem while delivering a more responsive and customer-focused experience. The Company undertook various initiatives to simplify customer journeys, streamline core business processes, enhance accessibility across platforms and improve service responsiveness through technology-led solutions. Some of these are given below.
Digital Onboarding Interface
As part of its ongoing journey, BHFL initiated a phased revamp of its digital platforms, including the customer portal, mobile application and website. These were aimed at creating a more unified and intuitive experience across assets, enabling customers to access services and information through a consistent interface, irrespective of the platform used. The customer onboarding journey was further strengthened through mobile-first, system-driven enhancements that enabled initiation of branch-independent applications and high frontline field team mobility. Integration of digital authentication and verification capabilities, including CKYC, Account Aggregator-based banking validation, and automated ITR and GST analysis, contributed to improvements in First Time Right (FTR) outcomes while also reinforcing compliance and process integrity at the application stage.
Digital Onboarding for Corporate Customers
Similar to the digital onboarding journey for retail customers, the capability has been expanded for corporate customers through the introduction of corporate application login and end-to-end digital execution. This is enabled through e-signing, thereby facilitating a seamless and paperless onboarding experience. In addition, multiple sales and post-login functionalities were introduced within the Customer Onboarding Journey (COB) platform to simplify downstream processes such as legal initiation, collateral creation and co-applicant updates.
AI Driven Initiatives
During FY2026, the Company advanced its digital transformation agenda by deploying a suite of Al-driven solutions designed to enhance efficiency, elevate customer experience, and unlock new business value. Key initiatives include:
• GenAI-powered Q&A bots deployed for service teams and employees, accelerating access to information, improving responsiveness, and driving measurable productivity gains.
• Customer portal AI chatbot on the service portal, delivering instant guidance and reducing resolution times, thereby improving customer satisfaction.
• Al-based data extraction platform capable of reading and processing information from images and PDFs, enabling automation across multiple business workflows and reducing manual effort.
• Text-based conversational AI solutions integrated across SMS, WhatsApp, and RCS channels, strengthening customer engagement and ensuring seamless multi-channel communication.
• Voice-based conversational AI solutions replicating human-like interactions in multiple languages, broadening accessibility and enhancing service quality for diverse customer segments.
Mid- and Back-Office Digital Initiatives
Digital execution of memorandum of entry (MOE) through NESL has been expanded to six states enhancing paperless execution as well as process standardisation. Adoption of the 1600 and 140 series in alignment with the RBI and TRAI guidelines has strengthened customer service efficiency and regulatory adherence.
Overall, these initiatives underscore the Companys continued focus on leveraging digital technologies to build scalable and customer-centric operations, while improving efficiency, compliance and long-term business resilience.
Underwriting and Operations
Underwriting
BHFLs robust asset quality underscores strong underwriting practices and distinct underwriting frameworks.
It has dedicated underwriting structures for retail (prime), retail (non-prime) and commercial customers. It follows a centralised, hub-based underwriting model to ensure faster decision-making and uniform credit assessment. This model operates through centralised hubs in retail prime segment, supported by advanced technology-led tools, including AI, Machine Learning (ML) and Business Rule Engines (BRE). These capabilities strengthen credit assessment and improve turnaround time. The model operates through regional hubs for non-prime customers.
The Company has distinct underwriting frameworks for salaried and self-employed customers, tailored to the unique characteristics of each segment. Through its sharply defined customer segmentation, it effectively categorises applications, optimises resource allocation and maintains a consistent approval turnaround time. The underwriting process also includes telephonic and video-based personal discussions complemented by physical business verification for self-employed customers.
Collateral
The Company has in-house collateral evaluation teams, responsible for both legal and technical assessments, which are also supported by external vendors. These in-house collateral teams are stationed across the hubs to ensure quality, accuracy, and timely processing of property-related validations along with technical team presence in micro markets. In addition to this, there are hindsight reviews by a central team on credit and collateral decisions before disbursement.
Commercial Underwriting
BHFL has a dedicated team with hybrid mix of field due diligence and centralised approval - with subject matter experts based in operating locations who recommend transactions for final decisioning/approval to the centralised team. This field team initially evaluates the transaction structure, customer profiling, cash flow assessment, funding schedule followed by a detailed credit appraisal memo comprising overall assessment of operational performance, financial strength, repayment capability, micro market and peer project assessment. This memo is recommended to the centralised team for final decision-making.
The underwriting team has distinct framework for developer financing and lease rental discounting.
For developer financing, the developers operational strength, historical track record of projects, financial performance, repayment capability, project approvals, micro-market and peer project assessment etc. are some of the parameters that are evaluated across three critical elements: developer, project and sanction milestone assessment. For LRD, the three critical underwriting elements span across lessor, lessee and collateral assessment and includes (i) business model, financial strength, repayment capacity assessment of lessor; (ii) financial performance, contractual lease duration, residual tenure, rental payment trend of lessee; and (iii) micro-market assessment, occupancy rates, historical vacancy and releasability of collateral.
Operations
As BHFL focuses on a leaner mid and back-office to increase efficiency, maintain process consistency and enhanced controllership, it operates at the regional hubs for loan processing of retail customers for KYC and loan related validations prior to disbursement. The Company has significantly reduced its manual intervention in back-end processes through implementation of digital onboarding journey, e-sanction letter, e-mandate, e-agreement, etc. which enhance customer experience while improving the turnaround time. For commercial products, the Company has centralised operations for both developer financing and LRD for loan booking, disbursement and escrow related validations.
Customer Service
Customer service and engagement across the loan lifecycle remains a priority and customer service function is focused on delivering an efficient and seamless resolution to strengthen customer trust, brand recall and loyalty.
The Companys initiatives reflect a decisive shift towards a customer-first service model driven by automation, efficiency, and scalability. Recognising the growing preference for digital and non-intrusive communication, BHFL has strengthened its self-service ecosystem through its customer portal and mobile app thereby enabling the customer to seamlessly raise service requests, download loan documents, access flexible repayment options (part pre-payments, tenure adjustments, missed instalment payments via ECMS, UPI, and Bill Desk), and utilise a self-service query module.
Enhancements to these platforms include an expanded digital service interface, a self-service video repository, and the launch of an in-house interactive chatbot (ServEase) enabling instant query resolution within digital platforms. The Company has enabled its customers with multiple channels including the portal, app, IVR and e-mail to raise requests and complaints.
To enhance transparency and customer confidence and in alignment with the RBI regulations, outbound service calls now display authenticated caller identification. Process improvements such as digitised charge registration through NESL-based MOE filing across six states, document consolidation to reduce OTP dependencies, and automated trigger flows have further reduced turnaround time and improved customer convenience. Additionally, the Company focuses on enhancing customer transparency and adherence of FPC through breakdown of relevant loan information in a Key Fact Statement (KFS) cum e-agreement.
BHFL has a robust grievance redressal framework with a structured escalation matrix and pre-defined turnaround timelines. Leveraging ML-based sentiment analysis and advanced analytics, it prioritises and categorises customer queries for faster and personalised resolution. Straight-through processing capabilities and data-driven insights enhance efficiency while enabling proactive engagement, portfolio segmentation, and tailored resolutions to strengthen long-term relationships.
Service quality is monitored through structured feedback mechanisms, root cause analysis of complaints, and active observation of social media and digital platforms. These allow the Company to promptly address concerns and implement corrective actions while simultaneously incorporating learnings from previous engagements on a recurring basis.
Operational Risk Management
Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, systems, human factors or from external events. It includes legal risk but excludes strategic and reputational risk.
Operational risk is inherent across BHFLs business and functions. The Company has instituted a Board- approved Operational Risk Management (ORM) framework that sets out the governance structure, policies and processes for identifying, assessing, monitoring and mitigating operational risks. It is designed to ensure a structured approach to managing operational risks across the organisation.
At Management level, Operational Risk Management Committee (ORMC) which is a sub-committee of the Risk Management Committee (RMC), oversees implementation of the operational risk framework.
The ORM framework enables systematic identification, assessment, measurement, monitoring, mitigation and reporting of operational risks. This is attained through determining key process areas, converting these areas to measurable and quantifiable metrics (KRIs), setting thresholds for defined KRIs, monitoring and reporting on breaches of those threshold levels. Accordingly, corrective actions are initiated to bring back any breaches within acceptable thresholds by conducting root cause analysis to identify failure of underlying process, people, systems or external events,
BHFL has three lines of defence model as a key component to manage operational risks. These are:
First line of defence: Business and functional units play a critical part in managing operational risk on a daily basis. BHFL has opted for a bottoms-up approach for risk identification across businesses and functions to drive ownership and a strong control culture to minimise operational risk. The units also monitor adherence to policies and processes laid down by the organisation.
Second line of defence: The operational risk management department (ORMD), risk department and compliance department forms second line of defence, which supports the first line of defence.
The ORMD implements operational risk management framework across the Company. It designs and develops tools required for implementation of the framework including appropriate guidelines.
Risk unit: It focuses on credit policy adherence in the portfolio which ensures that disbursed loans adhere to the policies and procedures put in place. Frauds, if any, are investigated to identify the root cause and relevant corrective actions are recommended to prevent recurrence.
Compliance unit: Recognising the critical importance of regulatory compliance, BHFL has instituted a robust compliance framework. It oversees the Companys overall compliance universe, with specific focus on regulations issued by the RBI, the NHB, the IRDAI and the Financial Intelligence Unit-India (FIU-IND). The
Company Secretary and Compliance Officer are responsible for compliance under the Companies Act, the SEBI regulations and other capital market-related legislations/rules. Both officers are supported by dedicated teams that actively monitor and manage statutory and regulatory obligations, ensuring adherence to applicable laws through systematic reviews and continuous monitoring. To further strengthen its compliance infrastructure and minimise risk of oversight, the Company implemented an across-the-board compliance management tool.
Third line of defence: Internal audit is the third line of defence, which independently evaluates the effectiveness of the ORM framework and provides assurance to the Board and senior management.
In addition to three lines of defence, BHFL also faces legal risks primarily associated with lending against collateral, where inadequate legal diligence can lead to potential litigation costs. These risks arise from omissions, negligence, fraud or misconduct during legal and documentation processes. To mitigate such risks, the Companys experienced legal and technical professionals ensure strict adherence to legal protocols, including comprehensive title verification and thorough scrutiny of all loan-related documentation. Robust operational procedures and customer service standards further strengthen compliance, reduce legal exposure and minimise customer complaints.
Human Resources
BHFL focuses on nurturing its workforce to build an entrepreneurial mindset and high standards of execution to deliver consistent performance. This year marked a shift for BHFL as it further sharpened its focus on building organisational strength for which it emphasises enhancing capability and strengthening governance.
The Companys initiatives throughout the year were guided by three priorities: scaling with discipline, deepening people capability, and reinforcing a culture grounded in integrity and performance. Collectively, these efforts are designed to set the foundation for a future-ready organisation equipped to meet customer demands of a dynamic and fast-growing business landscape.
Attract and nurture talent for long term growth
By having critical leadership and frontline talent through more precise and assessment-driven approach, the Company continued its commitment to build a future-ready workforce driven by capability and purpose. BHFL continues to focus on evaluating candidate attitude and behavioural fit. To further improve hiring predictability and ensure stronger customer-facing performance, it deployed structured assessment frameworks designed to bring the right talent into critical roles.
The Company continued to have a dedicated employee engagement and retention framework which enabled targeted development and retention interventions for high-potential employees.
Employee engagement
Periodic townhalls are conducted to communicate the Companys performance, crucial updates, strategic priorities and address employee queries by senior leaders. It has also strengthened its internal Voice of Customer mechanism to enhance responsiveness of functions to the frontline teams.
Employee assistance and well-being
BHFL follows a comprehensive approach towards the employees financial, medical and emotional support through various initiatives like medical and life cover through group insurance policies along with an option of covering their spouses and dependents, curated programme of financial aid to employees and their families during emergencies through its I-Care fund and flexible salary option through money-on-call facility.
Structured learning and development
The Company has structured training initiatives to enable both existing as well as new employees to understand the cultural anchors, policies and procedures for their on-the-job nuances while developing essential managerial skills. It has multiple training programs comprising Managerial Excellence Program (MEP) and Leadership Excellence Program (LEP) for frontline managers and leaders, STEPS training program for new employees to have seamless onboarding experience, as well as dedicated managerial training programs for functional employees. In addition, the Company has a dedicated learning platform for upskilling programs and mandatory learning courses for existing employees.
Diversity, equity and inclusion
The Company has dedicated DEI Spectrum policy to foster the culture of diversity, equity, and inclusion across the organisation along with structured program to enable women leaders to build resilience, leadership acumen and succeed in dynamic work environment.
Reward and recognition
BHFL continues to promote the culture of consistent performance and recognise exemplary contributions through dedicated reward and recognition programs across businesses and functions where exceptional performances are rewarded - thus encouraging the culture of excellence across the organisation.
Awards
BHFL was conferred with the following awards during the year:
• Best Housing Finance Company for FY2025 at Business Today Indias Best Banks Awards in February 2026.
• Best Data Quality Award for 2024-25 under housing finance company consumer segment by
TransUnion CIBII
Impact beyond business
BHFL continued to drive meaningful impact across sustainability, community development and workplace safety. This has been done through initiatives such as plantation drives, teaching and engaging with differently abled children, donation drive through Daan Utsav and active participation in blood donation camps.
The Company also received ISO 14001:2015 and ISO 45001:2018 certification which represents a significant milestone in its ongoing commitment to operational excellence, environmental stewardship, and in ensuring a safe and healthy workplace for all our stakeholders.
As on 31 March 2026, BHFL had 2,052 permanent employees.
Internal Control Systems and their Adequacy
The Company has institutionalised strong internal control system based upon established policies and procedures across its businesses and functions to identify potential risks, assess impact and mitigate these risks. Business and functional units have established controls and processes for smooth functioning of their operations, identify and mitigate probable risks which are further complemented by senior managements regular review of these measures.
To strengthen governance and oversight, the Company has multiple committees for review and oversight of key operational aspects comprising the Risk Management Committee (RMC) and the Asset Liability Committee (ALCO) having representation from business as well as functional stakeholders. Within this framework, it has three lines of defence:
• Internal Operations Management
• Risk and Compliance Functions
• Internal Audit Function
Internal Operations Management
The Company has established internal control framework to ensure reliability and accuracy of financial reporting and efficient conduct of its operations, where dedicated functions are responsible for periodic evaluation of the design and operating effectiveness of Internal Control over Financial Reporting (ICOFR), including process walkthroughs and review of documented controls. These assessments are conducted at regular intervals to identify any control deficiency which, if found, is promptly addressed through structured and time-bound corrective measures. In addition, the Company places strong emphasis on monitoring of Information and Technology General Controls (ITGC); and this assessment is carried out at periodic intervals to ensure security and continuity of internal controls across systems.
The Company has instituted specialised units within IT and operation functions tasked with conducting regular checks to ensure adherence with established processes and policies, proactively identifying gaps and implementing corrective actions to strengthen operational resilience. It also has a concurrent audit team to review operational processes, identify and mitigate operational risks across credit, collateral and operations along with a dedicated transaction monitoring unit to conduct through-the-door monitoring prior to disbursement.
BHFL conducts Cyber Security Maturity Assessment to improve its processes and technology implementation. It also conducts a Security Architecture Review to detect any configuration gap in security technologies implemented in the Company, and to take appropriate measures. BHFLs systems, products and practices affecting user data go through extensive audit assessment by external experts wherever applicable, regulatory audit as per IRDAI guidelines and ISO 27001 surveillance audit from the certification body.
Risk and Compliance Functions
Compliance forms an integral part of BHFLs governance and internal control framework, and the Companys compliance philosophy is based on the strict adherence to applicable laws, regulations, internal policies and customer transparency - emphasising that sustained stakeholder trust is built on accountable, transparent and responsible conduct.
To strengthen this commitment, the Company has a dedicated compliance unit which works in close coordination with business and functional units while maintaining independent and objective assessment of compliance risks, providing guidance and overseeing timely implementation of regulatory changes to embed a strong compliance culture across the organisation.
The Companys risk management and operational risk management have been covered under earlier sections.
Internal Audit Function
The Companys internal audit function periodically reviews adherence to regulatory requirements and internal policies across businesses and functions to strengthen operational discipline and governance standards. In line with the RBIs guidelines, BHFL has implemented a Risk-based Internal Audit (RBIA) framework aligned to the overall risk management framework and provides independent assurance to the Board of Directors and senior management on the effectiveness of the Companys internal controls, risk management and governance practices.
The Board-level Audit Committee oversees the performance of internal audit function and reviews the adequacy and effectiveness of the Companys internal controls by evaluating significant audit observations, Management responses and periodic follow up actions to ensure timely remediation and strengthening of internal control framework.
Investor Engagement and Communication
BHFL has a structured investor outreach programme aimed at facilitating transparent communication on the Companys performance, address investor queries and serves as an effective feedback mechanism. It ensures timely and consistent communication through press releases, investor presentations and financial results along with regular engagement with investors and research analysts through earnings calls, meetings and conferences.
Strengths, Risks and Opportunities Assessment
Strengths
• Sustainable business model: BHFLs strategic construct has a blend of scale, low risk and reasonable return to enable the Company to become one of the largest mortgage originator.
• Full mortgage product suite: Diversified product portfolio with all mortgage products offerings to cater to various transaction needs of all relevant customer segments.
• Strong brand complemented by consistent financial performance over the years.
• Highest possible credit rating: Long term debt programme credit rating of AAA/ stable by CRISIL and India Ratings enable availability of multiple borrowings sources at better cost of funds.
• Robust asset quality: Strong risk management and debt management framework supporting asset quality reflecting from one of the lowest GNPA amongst large HFCs.
• Tech enabler orientation: Enhances customer experience and transparency through multiple digital initiatives and seamless customer journey.
Risks
• Adverse macroeconomic conditions: Adverse geopolitical scenario and economic indicators impact on borrowing cost and liquidity.
• Margin moderation: Margin impact due to reduction in portfolio yield and increase in cost of funds resulting from adverse interest rate scenario.
• Portfolio attrition: Portfolio susceptible to higher attrition resulting from prolonged continuation of downward interest rate cycle and competitive intensity.
• Regulatory changes impacting transitionary impact.
• Adverse real estate market: Increase in inventories or vacancy levels or sharp decline in property prices impacting credit offtake as well as delinquency.
Opportunities
• Market share gain: The Companys existing market share in housing loans portfolio provides significant headroom for growth amidst improving housing loans to GDP ratio of the country.
• Scaling newly launched products: Investment in Sambhav, the near prime and affordable housing SBU, expanding customer segment and providing cushion for yield enhancement.
• Leveraging developer financing projects: Improvement in higher retail home loan penetration from developer financing funded relationships.
• Improving operating leverage: Continuous productivity enhancement and leveraging technology to support improvement in opex to NTI.
Fulfilment of the RBI and NHBs norms and standards
BHFL adheres to the prescribed norms and regulations for housing finance companies by the RBI and NHB along with the Upper Layer NBFC norms under the Scale Based Regulations. To comply with various regulatory thresholds as detailed in table below, the Company has implemented required processes and policies along with tracking mechanism.
Table 8: Regulatory ratios versus the minimum requirements stipulated by the RBI
| Particulars | As on 31 March 2026 | RBI Stipulation |
| Capital to Risk-weighted Assets Ratio (CRAR): | 22.46% | 15.00% |
| Of which Tier-I | 22.01% | 10.00% |
| Principal Business Criteria: | ||
| Overall PBC | 60.88% | 60.00% |
| IHL PBC | 50.45% | 50.00% |
| Liquidity Coverage Ratio | 152.52% | 100% |
| Asset liability mismatch: | ||
| 1-7 days | 48% | (10%) |
| 8-14 days | 30% | (10%) |
| 15-30/31 days | 12% | (20%) |
Cautionary Statement
Some statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied.
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
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+91 9892691696
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