3.8 Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event that probably
requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation
that may, but probably will not, require an outflow of resources. The Company also discloses present
obligations for which a reliable estimate cannot be made as a contingent liability. When there is a possible
obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no
provision or disclosure is made.

3.9 Leases

As a Lessee

The Company follows Ind AS 116 'Leases' for accounting of various office premises and servers taken
on lease.

Measurement of lease liability

At the time of initial recognition, the Company measures lease liability as present value of all lease
payments over primary period of lease, discounted using the Company's incremental cost of borrowing
of similar tenure and directly attributable costs. Subsequently, the lease liability is increased by interest
on lease liability, reduced by lease payments made and remeasured to reflect any reassessment or lease
modifications specified in Ind AS 116 'Leases', or to reflect revised fixed lease payments.

Measurement of Right-of-use assets

At the time of initial recognition, the Company measures 'right-of-use assets' as present value of all lease
payments over primary period of lease, discounted using the Company's incremental cost of borrowing
of similar tenure. Subsequently, 'Right-of-use assets' is measured using cost model i.e. at cost less any
accumulated depreciation and any accumulated impairment losses adjusted for any re-measurement
of the lease liability specified in Ind AS 116 'Leases'. Depreciation on 'right-of-use assets' is provided on
straight line basis over the lease period.

The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less. The Company recognises the lease payments associated with
these leases as an expense over the lease term.

Modification of lease

Modification of lease due to change in scope or consideration or lease term requires remeasurement of
lease liability.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset,
or Profit and Loss if the right-of-use asset is already reduced to zero.

As a Lessor

The Company has leased vehicles and transferred substantially all the associated risks and rewards
incidental to ownership. Consequently, these leases are categorised as finance leases.

Assets leased out under finance lease are recorded as finance lease receivables, equivalent to the net
investment in the lease. The net investment is calculated by discounting the gross lease investment at the
interest rate implicit in the lease. The principal portion of lease payments decreases the net investment in the
lease, while interest portion is recorded in the statement of profit or loss under interest income throughout
the lease term. This recognition is based on a consistent periodic rate of return on the Company's net
investment in the lease.

3.10 Fair value measurement

The Company measures its qualifying financial instruments at fair value on each Balance Sheet date.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data is available to measure fair value, maximising the use of relevant observable inputs and minimising
the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy into Level I, Level II and Level III based on the lowest level input
that is significant to the fair value measurement as a whole. For a detailed information on the fair value
hierarchy, refer note no. 48.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities
on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair
value hierarchy.

3.11 Derivative financial instruments

The Company enters into derivative financial instruments such as foreign exchange forward contracts,
Interest Rate Swap (IRS) and Cross Currency Interest Rate Swaps (CCIRS) to manage its exposure
to interest rate risk and foreign exchange rate risk. Derivative contracts are initially recognised at fair
value on the date of entering into contract and are subsequently remeasured to their fair value at each
Balance Sheet date. The resulting gains/losses are recognised in the Statement of Profit and Loss
immediately unless the derivative is designated and is effective as a hedging instrument. For hedging
instrument, the timing of the recognition in the Statement of Profit and Loss depends on the nature of the
hedge relationship.

The Company designates its CCIRS, IRS and spot element of foreign exchange forward contract
derivatives as cash flow hedges of a recognised liability. The Company recognises derivatives with a
positive fair value as a financial asset and derivatives with a negative fair value as a financial liability.

Hedge accounting

The Company makes use of derivative instruments to manage exposures to interest rate risk and foreign
currency risk. In order to manage particular risks, the Company applies hedge accounting for transactions
that meet specified criteria.

At the inception of a hedge relationship, the Company formally designates and documents the hedge
relationship to which the Company wishes to apply hedge accounting and the risk management objective
and strategy for undertaking the hedge. The documentation includes the Company's risk management
objective and strategy for undertaking hedge, the hedging/economic relationship, the hedged item or
transaction, the nature of the risk being hedged, hedge ratio and how the Company would assess the
effectiveness of changes in the hedging instrument's fair value in offsetting the exposure to changes
in the hedged item's cash flows attributable to the hedged risk. Such hedges are expected to be highly
effective in achieving offsetting changes in cash flows and are assessed on an on-going basis to
determine that they actually have been highly effective throughout the financial reporting periods for
which they were designated.

Cash flow hedge

Hedges that meet the criteria for hedge accounting and qualify as cash flow hedges are accounted
as follows:

A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular
risk associated with a recognised asset or liability and could affect profit or loss.

For designated and qualifying cash flow hedges, the effective portion of the cumulative gain or loss on
the hedging instrument is initially recognised directly in OCI within equity (cash flow hedge reserve). The
ineffective portion of the gain or loss on the hedging instrument is recognised immediately as finance cost
in the Statement of Profit and Loss.

When the hedged cash flow affects the Statement of Profit and Loss, the effective portion of the gain or
loss on the hedging instrument is recorded in the corresponding income or expense line of the Statement
of Profit and Loss.

When a hedging instrument expires, is sold, terminated, exercised, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or loss recognised in OCI is subsequently transferred to
the Statement of Profit and Loss on ultimate recognition of the underlying hedged forecast transaction.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported
in OCI is immediately transferred to the Statement of Profit and Loss.

4 Recent accounting pronouncements

Ministry of Corporate Affairs ('MCA') notifies new standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31
March 2026, MCA has notified following amendments to the existing standards applicable to the Company

Ind AS 1 - Presentation of Financial Statements, applicable w.e.f. 1 April 2025

The amendment clarifies that the classification of liabilities as current or non-current depends on the
rights that exist at the end of the reporting period. A liability is classified as non-current only if the
entity has a substantive right to defer settlement for at least twelve months after the reporting period.
Management expectations or subsequent events after the reporting date do not affect classification.

The amendment relating to classification of liabilities has no material impact on the Company's
financial statements.

Ind AS 7 - Statement of Cash Flows, applicable w.e.f. 1 April 2025

The amendment in Ind AS 7 requires to inform users of financial statements of the existence of supplier
finance arrangements and explain the nature of the arrangements, the carrying amount of liabilities
and the range of payment due dates. The Company has assessed the impact of this amendment and
concluded that it has no material impact on the financial statements.

Ind AS 12 - Income taxes, applicable w.e.f. 1 April 2025

The amendment provides a temporary exception from recognition and disclosure of deferred taxes arising
from Pillar Two income taxes and introduces related disclosure requirements. The Company has assessed
the impact of this amendment and concluded that it has no material impact on the financial statements.

Ind AS 21 - The Effects of Changes in Foreign Exchange Rates, applicable w.e.f. 1 April 2025

The amendment specifies how an entity should determine the exchange rate when foreign currency
cannot be obtained within a reasonable time and prescribes related disclosures. The Company
has assessed the impact of this amendment and concluded that it has no material impact on the
financial statements.

Ind AS 107 - Financial Instruments: Disclosures, applicable w.e.f. 1 April 2025

Ind AS 107 has been amended to add supplier finance arrangements as a factor that may cause
concentration of liquidity risk. The Company has reviewed the amendment and based on its evaluation has
determined that it does not have any material impact on the financial statements.

7 Derivative financial instruments (at FVTPL) (Contd.)

The Company has a Board approved policy for entering into derivative transactions. Derivative transactions
comprise of currency, coupon only swaps and forward contracts. The Company undertakes such transactions
for hedging of foreign currency borrowings. The Asset Liability Management Committee periodically monitors
and reviews the risk involved. refer note no. 49(b) (iii) for foreign currency risk.

Finance lease disclosure

The Company has entered into a lease arrangements for vehicles and equipments as a lessor. These are
accounted as finance lease as material risks and rewards are transferred to the lessee. The tenor of these leases
ranges from 6 months to 84 months (Previous year 12 months to 60 months). The contracted interest rate
ranges from 8.70% to 12.07% p.a. (previous year 10.25% to 11.50% p.a.).

The maturity analysis of finance lease receivables, including the undiscounted lease payments to be received
are as follows-

13 (A) Property, plant and equipment and intangible assets (Contd.)Depreciation and amortisation

Depreciation and amortisation is provided using straight line method over the useful life of assets assuming
no residual value at the end of useful life of the asset. Depreciation and amortisation on addition to assets and
assets sold during the year is being provided from/up to the month in which such asset is added or sold as the
case may be.

Useful lives of assets are determined by the Management by an internal technical assessment except where
such assessment suggests a life significantly different from those prescribed by Schedule II of the Companies
Act, 2013 where the useful life is as assessed and certified by a technical expert.

13 (B) Capital work-in-progress, Intangible assets under development

The Company discloses property, plant and equipment that are not ready for use as Capital work-in-progress.
These are carried at cost, comprising direct cost and related incidental expenses. Intangible assets not ready for
their intended use on the date of Balance Sheet are disclosed as 'Intangible assets under development'.

23 Equity share capital (Contd.)

(B) Terms/rights/restrictions attached to equity shares

The Company has only one class of equity shares having a par value of C 1 per share. Each holder of
equity shares is entitled to one vote per share. The dividend recommended by the Board of Directors
and approved by the shareholders in the Annual General Meeting is paid in Indian Rupees. In the event of
liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The distribution will be in proportion to the number
of equity shares held by the shareholders.

(i) Current year:

The unspent amount primarily pertains to ongoing projects that were initiated during the current financial year. These projects
span over two to three years and operate under milestone-based payment structures tied to agreed deliverables. The amounts
allocated in respect of these projects for current financial year have already been disbursed, while the balance will be paid in
subsequent years upon achievement of the remaining milestones. The unspent amount of C 15.16 crore would be transferred
to a designated Unspent Corporate Social Responsibility Account with scheduled commercial bank in line with the requirement
prescribed in the Act.

Previous year:

Due to delay in commencement of projects as compared to approved timelines, some part of the mandatory obligations
for few ongoing projects remained unspent as on 31 March 2025. The unspent amount of C 6.24 crore was transferred to a
designated Unspent Corporate Social Responsibility Account with scheduled commercial bank in line with the requirement
prescribed in the Act.

(ii) During the Previous year ended 31 March 2025, the Company had entered into a transaction with Pratham Education
Foundation for C 3.05 crore for implementation of its corporate social responsibility activities.

38 Earnings per equity share (EPS)

Basic EPS is calculated in accordance with Ind AS 33 'Earnings per share' by dividing the profit for the year
attributable to equity holders of the Company by the weighted average number of equity shares outstanding
during the year. Diluted EPS is calculated by dividing the profit attributable to equity holders of the Company by
the weighted average number of equity shares outstanding during the year plus the weighted average number
of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares
of the Company.

39 Segment Information

The Company is engaged primarily in the business of financing in India and accordingly there are no separate
operating segments as per Ind AS 108 dealing with Operating Segments.

Gratuity

With the introduction of the Code on Social Security, 2020 w.e.f. 21 November 2025, the Payment of Gratuity
Act, 1972 is repealed. While the Act has been repealed, its core provisions have been incorporated into the new
Code. The new code has also defined the eligibility of fixed-term employees for gratuity after completion of one
year of service and introduced new definition of 'wages'.

The Company has a gratuity plan for its employee's, and gratuity benefit applicable to the employees of the
Company is higher of (a) gratuity computed on the basis of wages capped at C 20 lakh and (b) gratuity computed
on the basis of Company's internal gratuity scheme.

42 Employee benefit plans (Contd.)

Employees, other than fixed-term employees, who are in continuous service for a period of 5 years; and
fixed-term employees who are in continuous service for a period of one year, are eligible for gratuity. The level
of benefits provided depends on the employee's length of service, and wages/eligible salary at the time of
separation/retirement.

The Company has a funded gratuity plan. Payment for present liability of future payment of gratuity is made to the
approved gratuity fund under cash accumulation policy and debt fund. Any deficits in plan assets as compared to
actuarial liability determined by an actuary are recognised as a liability.

Actuarial liability is computed using the projected unit credit method. The calculation includes assumptions with
regard to discount rate, salary escalation rate, attrition rate and mortality rate. Management determines these
assumptions based on past trends and forseeable changes in consultation with actuary. Gains and losses through
remeasurements of the net defined benefit liability/assets are recognised immediately in the Balance Sheet with a
corresponding debit or credit to retained earnings through OCI in the period in which they occur. The effect of any
planned amendments is recognised in Statement of Profit and Loss. Remeasurements are not reclassified to profit
or loss in subsequent periods.

(i) The Company is of the opinion that the above demands are not tenable and expects to succeed in its
appeals/defense.

(ii) The Commissioner, Service Tax Commissionerate Pune, through an order dated 31 March 2017, has
confirmed the demand of service tax of C 644.65 crore and penalties of C 198.95 crore from the Company
in relation to the interest subsidy received by the Company from manufacturers and dealers during the
period starting from 1 April 2010 till 30 September 2016. The Commissioner has also demanded payment
of interest on the demand of service tax confirmed until the date the Company pays the service tax
demanded, which as at 31 March 2026 amounted to C 1,174.32 crore. In accordance with legal advice,
the Company filed an appeal on 6 July 2017 with the Customs, Excise and Service Tax Appellate Tribunal
(CESTAT), Mumbai disputing the demands. The Company, in line with the opinion obtained from a senior
legal counsel, is of view that the said demands are not tenable.

In addition, the Principal Commissioner, Central GST and Central Excise, Commissionerate Pune -I, through
order dated 3 February 2021, has confirmed the demand of service tax of C 217.22 crore and penalty
thereon of C 21.72 crore from the Company in relation to the interest subsidy received by the Company
from manufacturers and dealers during the period starting from 1 October 2016 till 30 June 2017. The
Principal Commissioner has also demanded payment of interest on the demand of service tax confirmed
until the date the Company pays the service tax demanded, which as at 31 March 2026 amounted to
C 295.34 crore. In accordance with legal advice, the Company filed an appeal on 14 June 2021 with the
Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai against the said demand. The
Company, in line with the opinion obtained from a senior legal counsel, is of view that the said demands
are not tenable.

(iii) The Joint Commissioner, Central Tax, Pune-II Commissionerate, through an order dated 21 January 2025,
has confirmed the demand of GST of C 341.29 crore and penalty of C 341.29 crore from the Company in
relation to interest collected upfront by the Company from its customers during the period starting from 1
July 2017 till 31 March 2024, alleging that the of interest collected upfront is in the nature of fees/charges.
The Joint Commissioner has also demanded payment of interest on the demand of GST confirmed until
the date the Company pays the GST liability demanded, which as at 31 March 2026 amounted to C 253.64
crore. In accordance with legal advice, the Company has filed an appeal on 23 April 2025 before the
office of the Commissioner (Appeals), Pune disputing the demand. The Company, in line with the opinion
obtained from a senior legal counsel, is of view that the said demands are not tenable.

(iv) The Commissioner, Central Excise and CGST, Pune -I, Commissionerate, through an order dated 15
November 2021, has confirmed the demand of service tax of C 188.37 crore and penalty of C 188.37 crore
from the Company alleging short reversal of Cenvat credit with respect to investment activity undertaken
by the Company, in accordance with Rule 6(3) (i) Cenvat Credit rules, 2004 during the period starting
from 1 October 2014 till 30 June 2017. In addition, the Commissioner has demanded payment of interest

43 Contingent liabilities and commitments (Contd.)

on the demand of service tax confirmed until the date the Company pays the service tax demanded, which
as at 31 March 2026 amounted to C 281.83 crore. In accordance with legal advice, the Company filed
an appeal on 17 February 2022 with the Customs, Excise and Service Tax Appellate Tribunal (CESTAT)
Mumbai disputing the demands. The Company, in line with the opinion obtained from a legal counsel, is of
view that the said demands are not tenable.

(v) It is not practicable for the Company to estimate the timings of the cash flows, if any, in respect of the
above pending resolution of the respective proceedings.

Notes:

* Transaction values are excluding taxes and duties.

* Amount in bracket denotes credit balance.

* Transactions where Company act as intermediary and passed through Company's books of accounts are not in nature of related party
transaction and hence are not disclosed.

* Name of the related party and nature of the related party relationship where control exists have been disclosed irrespective of whether
or not there have been transactions between the related parties. In other cases, disclosure has been made only when there have been
transactions with those parties.

* Related parties as defined under clause 9 of the Indian Accounting Standard - 24 'Related Party Disclosures' have been identified based
on representations made by key management personnel and information available with the Company. All above transactions are in the
ordinary course of business and on arms' length basis. All outstanding balances are to be settled in cash (except deemed equity and
preferential warrants) and are unsecured (except secured non-convertible debentures issued to related parties which are disclosed
appropriately).

* Provisions for gratuity, compensated absences and other short-term service benefits are made for the Company as a whole and the
amounts pertaining to the key management personnel are not specifically identified and hence are not included above.

* During the year, the Company subdivided its shares into face value from C 2 to C 1 per fully paid equity share and issued four fully paid
bonus equity shares for every one fully paid equity share of face value C1 (refer note no. 23(a). These actions were uniformly applied to
all equity shareholders, including related parties.

* During the year, the Company sold 16.66 crore shares of BHFL through Open Market mechanism by executing a bulk deal in secondary
market. Consequently, the Company's shareholding in BHFL reduced from 88.75% to 86.70%.

* During the period, Bajaj Financial Securities Limited (Bfinsec) has charged brokerage and other transaction charges amounting to
C 4.47 crore (previous year C 9.00 crore) related to sale of securities on behalf of the Company's loan against securities customers.

The Company receives net sale value i.e. after deduction of these charges which are ultimately borne by its customers. The Company
does not recognise these customer related charges in its Statement of Profit and Loss. Amount receivable from BFinsec as on 31 March
2026 is C 4.91 crore (previous year C 17.28 crore) towards such sale transaction on behalf of loan against shares customers has been
shown as payable to customers.

* Non-convertible debentures (NCDs) transactions include only issuance from primary market,and outstanding balance is balances of
NCDs held by related parties as on reporting date.

* The above disclosures have been made for related parties identified as such only to be in conformity with the Indian Accounting
Standard (IND AS) 24.

46 Capital

The Company actively manages its capital base to cover risks inherent to its business and meet the capital
adequacy requirement of RBI. The adequacy of the Company's capital is monitored using, among other
measures, the regulations issued by RBI.

(i) Capital management
Objective

The Company's objective is to maintain appropriate levels of capital to support its business strategy taking
into account the regulatory, economic and commercial environment. The Company aims to maintain a
strong capital base to support the risks inherent to its business and growth strategies. The Company
endeavours to maintain a higher capital base than the mandated regulatory capital at all times.

Planning

The Company's assessment of capital requirement is aligned to the mandatory regulatory capital and its
planned growth which forms part of an annual operating plan which is approved by the Board and also a
long range strategy. These growth plans are aligned to assessment of risks- which include credit, liquidity
and market.

The Company monitors its capital to risk-weighted assets ratio (CRAR) on a monthly basis through its
assets liability management committee (ALCO).

The Company endeavours to maintain its CRAR higher than the mandated regulatory norm. Accordingly,
increase in capital is planned well in advance to ensure adequate funding for its growth.

The Company's dividend distribution policy states that subject to profits and other financial parameters
as per applicable legal provisions, the Board shall endeavour to maintain a dividend payout in the range of
15% to 25% of standalone profits after tax.

Further, the Company supports funding needs of its wholly owned subsidiaries, associates and other
investee companies by way of capital infusion and loans. Similarly, the Company also makes investment
in other companies for operating and strategic reasons. These investments are funded by the Company
through its equity share capital and other equity which inter alia includes retained profits.

47 Events after reporting date

There have been no events after the reporting date that require adjustment/disclosure in these
financial statements.

48 Fair values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the measurement date under current market
conditions (i.e., an exit price), regardless of whether that price is directly observable or estimated using a
valuation technique.

In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of
valuation techniques.

Fair value hierarchy

The Company determines fair values of its financial instruments according to the following hierarchy:

I evel 1 - valuation based on quoted market price: financial instruments with quoted prices for identical
instruments in active markets that the Company can access at the measurement date.

I evel 2 - valuation using observable inputs: financial instruments with quoted prices for similar instruments in
active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments
valued using models where all significant inputs are observable.

I evel 3 - valuation technique with significant unobservable inputs: financial instruments valued using valuation
techniques where one or more significant inputs are unobservable.

This note describes the fair value measurement of both financial and non-financial instruments.

Valuation framework

The Company has an internal fair value assessment team which assesses the fair values of assets qualifying for
fair valuation.

The Company's valuation framework includes:

• Benchmarking prices against observable market prices or other independent sources;

• Development and validation of fair valuation models using model logic, inputs, outputs and adjustments.

• Use of fair values as determined by the derivative counter parties.

These valuation models are subject to a process of due diligence and validation before they become operational
and are continuously calibrated. These models are reviewed and validated by various units of the Company
including risk, treasury and finance. The Company has an established procedure governing valuation which
ensures fair values are in compliance with accounting standards.

Valuation methodologies adopted

Fair values of financial instruments, other than those which are subsequently measured at amortised cost, have
been arrived at as under:

• Fair values of investments held under FVTPL have been determined under level 1 using quoted market prices
of the underlying instruments;

• Fair values of investments in unquoted equity instruments designated under FVOCI have been measured
under level 3 at fair value based on a discounted cash flow model.

• Fair values of investment in quoted equity and other instruments designated under FVOCI have been
determined under level 1 using quoted market prices of the underlying instruments.

• Derivative financial instrument i.e. cross currency interest rate swap (CCIRS) held for the purpose of hedging
foreign currency denominated External Commercial Borrowings are accounted as a cash flow hedge. Fair
value of CCIRS has been determined under Level 2 using discounted cash flow method by deriving future
forward rates from published zero coupon yield curve. All future cash flows for both the paying and receiving
legs in the swap contract are discounted to present value using these forward rates to arrive at the fair value
as at reporting date.

• The Company has also hedged some of its foreign currency exposure under external commercial borrowings
using currency forward contracts. Fair value of forward contracts have been determined under Level 2
wherein forward rate effective for the reporting date for the value date of the derivative contract basis USD
INR FWD onshore curve from Bloomberg has been considered. Net effective position of contracted forward
rate and the derived forward rate for the reporting rate has been considered as the fair valuation.

Fair values of financial instruments which are subsequently measured at amortised cost have been computed
using discounted cash flow models based on contractual cash flows using latest yields. In case of cash and
cash equivalents, bank balances, trade receivables, short-term loans, floating rate loans, trade payables,
short-term debts, borrowings, bank overdrafts and other current liabilities, carrying value are a reasonable
approximation of their fair value and hence their carrying values are deemed to be fair values.

Liquidity risk

The Company's ALCO monitors asset liability mismatches to ensure that there are no imbalances or excessive
concentrations on either side of the Balance Sheet.

The Company maintains a judicious mix of borrowings from banks, money markets, External commercial borrowings
(ECBs), securitisation, public and other deposits and focuses on diversification of its sources of borrowings with an
emphasis on longer tenor borrowings. This strategy of balancing varied sources of funds and long tenor borrowings
along with liquidity buffer framework has aided the Company maintain a healthy asset liability position and interest
rate during the financial year ended 31 March 2026 (FY 2025-26). The overall borrowings including debt securities,
deposits and subordinated liabilities stood at C 322,818.39 crore as of 31 March 2026 (previous year C 275,217.60
crore). The weighted average cost of borrowing was 7.60% for FY 2025-26 (previous year 7.99%).

The Company continuously monitors liquidity in the market; and as a part of its liquidity risk framework
maintains a liquidity buffer through an active investment desk to reduce this risk. The Company endeavours to
maintain an average liquidity buffer of 4% to 6% of its overall net borrowings under various market scenario.

RBI has issued guidelines on liquidity risk framework for NBFCs, covering various aspects of Liquidity risk
management such as granular level classification of buckets in structural liquidity statement, tolerance limits
thereupon, and liquidity risk management tools and principles. The Company has a Board approved Liquidity
Risk Management Framework which covers liquidity risk management policy, strategies and practices, liquidity
coverage ratio (LCR), stress testing, collateral management for derivative exposure, contingency funding plan,
maturity profiling, liquidity risk measurement - stock approach, currency risk, interest rate risk and liquidity risk
monitoring framework.

The Company exceeds the regulatory requirement of LCR which mandates maintaining prescribed coverage of
expected net cash outflows for a stressed scenario in the form of high quality liquid assets (HQLA). As of 31
March 2026, the Company maintained a LCR of 128.38% (previous year 124.93%), well in excess of the RBI's
stipulated norm of 100%.

The Company has a Board approved Contingency Funding Plan (CFP) to respond quickly to any anticipated
or actual stressed market conditions. The primary goal of the CFP is to provide a framework of action plan for
contingency funding when the Company experiences a reduction to its liquidity position, either from causes
unique to the Company or systemic events limiting its ability to maintain normal operations and service to
customers. The CFP defines the framework to assess, measure, monitor, and respond to potential contingency
funding needs. CFP also clearly lays down the specific contingency funding sources, conditions related to the use
of these sources and when they would be used. Roles and responsibilities of the Crisis Management Team (CMT)
constituted under the CFP have been identified to facilitate the effective execution of CFP in a contingency event.

The table below summarises the maturity profile of the undiscounted contractual cash flow of the Company's
financial liabilities:

Market risk

Market risk is the risk that the fair value of future cash flow of financial instruments will fluctuate due to changes
in the market variables such as interest rates, foreign exchange rates, equity prices and credit spreads on
investment and borrowings.

(i) Interest rate risk

On assets and liabilities

For floating rate assets and liabilities sensitivity analysis is prepared assuming the amount outstanding at
the end of the reporting period was outstanding for the whole year.

The following table demonstrate the sensitivity to a reasonably possible change in interest rate on that
portion of loans and borrowings affected. With all other variable held constant, the Company's profit before
tax is affected through the impact on floating rate financial assets and liabilities, as follows:

(iii) Foreign currency risk

The Company is exposed to foreign currency fluctuation risk for its external commercial borrowing (ECB).
The Company's borrowings in foreign currency are governed by extant RBI guidelines and Board approved
policies. As a matter of prudence, the Company hedges the entire ECB exposure for the full tenure as per
its Board approved Interest rate and currency risk hedging policy.

The Company evaluates its fully hedged cost for raising ECB. The Company manages its currency risks by
entering into over the counter (OTC) derivatives contracts such as cross currency swaps and forwards as
hedge positions and the same are being governed through the Board approved 'Interest rate and currency
risk hedging policy'. These derivative contracts are entered with counterparties (banks) with strong
credit rating to ensure that the effect of credit risk does not dominate the changes that result from the
established economic relationship.

Interest rate sensitivity impact on profit or loss and OCI:

The sensitivity to changes in interest rates arises from derivative financial instruments, such as forward
exchange contracts and currency swaps, which are designated as cash flow hedges. The impact of
interest rate movements on these instruments is recognised in Other Comprehensive Income (OCI). For
the purpose of sensitivity analysis, the Company has considered a uniform increase and decrease of ±1%
in the relevant interest rates to assess the impact on OCI.

Hedging policy

The Company's hedging policy only allows for effective hedging relationships to be considered as hedges
as per the relevant Ind AS. Hedge effectiveness is determined at the inception of the hedge relationship
and through periodic prospective effectiveness assessments to ensure that an economic relationship
exists between the hedged item and hedging instrument. The Company enters into hedge relationships
where the critical terms of the hedging instrument matches with the terms of the hedged item, and so
a qualitative and quantitative assessment of effectiveness is performed. The hedge ratio established
remains at 1:1 for the hedge relationship as the underlying risks and notional amount of the hedging
instrument are identical to that of the hedged items.

Credit risk

Credit risk is the risk of financial loss arising out of customers or counterparties failing to meet their repayment
obligations to the Company. The Company has a diversified lending model spread across secured and
unsecured products. The Company assesses the credit quality of all financial instruments that are subject to
credit risk.

Classification of financial assets under various stages

The Company classifies its financial assets in three stages having the following characteristics:

• stage 1: which are not credit impaired as on date and without significant increase in credit risk since initial
recognition on which a 12-month allowance for ECL is recognised;

• stage 2: a significant increase in credit risk since initial recognition on which a lifetime ECL is recognised; and

• stage 3: objective evidence of impairment and therefore considered to be in default or otherwise credit
impaired on which a lifetime ECL is recognised.

Treatment and classification methodology of different stages of financial assets is detailed in note no. 3.3 (i)
Computation of impairment on financial instruments

The Company calculates impairment on financial instruments as per ECL approach prescribed under Ind AS 109
'Financial instruments'. ECL uses three main components: PD (Probability of Default), LGD (loss given default)
and EAD (exposure at default) along with an adjustment considering forward macro economic conditions. For
further details of computation of ECL please refer to material accounting policies note no 3.3 (i).

The Company recalibrates components of its ECL model periodically by; (1) incorporating the available
incremental and recent information, except where such information does not represent the future outcome,
and (2) assessing changes to its statistical techniques for a granular estimation of ECL. Accordingly, during the
year, the Company has recalibrated various components of its ECL model and used them in redevelopement of
the model. The changes to ECL model and its implementation are approved by Board and its Committee.

During the year, to enhance Balance sheet resilience and further strengthen its ECL framework, the Company
introduced LGD flooring across various businesses. LGD flooring has been introduced as a more conservative
and prudent approach to provisioning and the Company will continue the same over the medium term period.

Collateral Valuation

The Company offers loans to customers across various lending verticals as articulated above. These loans
includes both unsecured loans and loans secured by collateral. Although collateral is an important risk mitigant
of credit risk, the Company's practice is to lend on the basis of assessment of the customer's ability to repay
than placing primary reliance on collateral. Based on the nature of product and the Company's assessment of
the customer's credit risk, a loan may be offered with suitable collateral. Depending on its form, collateral can
have a significant effect in mitigating the Company's credit risk.

The main types of collateral across various products obtained are as follows:

The repossessed assets are either sold through auction or released to delinquent customers in case they come
forward to settle their dues. For its loan against securities business, the Company recoups shortfall in value of
securities through part recall of loans or additional securities from the customer, or sale of underlying securities.
The Company does not record repossessed assets on its Balance Sheet as non-current assets held for sale.

Guarantee Cover taken on loans

The Company takes guarantee cover for certain qualifying portfolios under Credit Guarantee Fund Scheme
for NBFCs (CGS-II) from Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) governed by
the SIDBI and Credit Guarantee Fund for Micro Units (CGMFU) governed by National Credit Guarantee Trustee
Company Limited (NCGTC). Further, the Company had granted loans under RBI's Emergency Credit Line
Guarantee Scheme (ECLGS) to qualifying customers.

Analysis of concentration risk

The Company focuses on granulisation of loans portfolios by expanding its geographic reach to reduce
geographic concentrations while continually calibrating its product mix across all categories of lending portfolio.

ECL sensitivity analysis to forward economic conditions and management overlay

Allowance for impairment on financial instruments recognised in the financial statements reflect the effect of
a range of possible economic outcomes, calculated on a probability-weighted basis, based on the economic
scenarios described below. The recognition and measurement of expected credit losses ('ECL') involves the use
of estimation. It is necessary to formulate multiple forward-looking economic forecasts and its impact as an
integral part of ECL model.

The ECL model and its input variables are recalibrated periodically by incorporating available incremental and
recent information. It is possible that internal estimates of PD, EAD and LGD rates used in the ECL model may
not always capture all the characteristics of the market and the external environment as at the reporting date.

To reflect this, qualitative adjustments or overlays are made as temporary adjustments to reflect the emerging
risks reasonably.

Methodology

The Company has adopted the use of three scenarios, representative of its view of forecasted economic
conditions, required to calculate unbiased estimation of forward looking economic adjustment to its ECL.

They represent a most likely outcome i.e. Central scenario and two less likely outer scenarios referred to as
the Downside and Upside scenarios. The Company has assigned a 10% probability to the two outer scenarios,
while the Central scenario has been assigned an 80% probability. On 8 April 2026, the MPC (Monetary Policy
Committee of the RBI) opined that the intensity and the duration of the (West Asia) conflict and the resultant
damage to the energy and other infrastructure add risk to the inflation and growth outlooks. However, the
fundamentals of the Indian economy are on a stronger footing, providing it with greater resilience to withstand
shocks now than in the past.

Additionally, the Company also reviewed the appropriateness of the Forward-looking Economic Guidance (FEG)
assumptions used for Expected Credit Loss (ECL) assessment under Ind AS 109 by evaluating alternative
scenario weightings of 75:15:10 and 80:15:5 for the central, downside and upside scenarios, respectively. In
determining the most appropriate scenario, the Company considered (a) the RBI Governor's statement dated
8 April 2026 reaffirming the resilience of the Indian economy and supporting macro-economic indicators, (b)
proactive measures undertaken by the Government of India to mitigate inflationary pressures by containing
retail fuel price increases, including the reduction in special excise duties on petrol by C10 per litre and diesel,
and (c) the stability of the Company's business operations, EMI default rates and collection efficiencies since
the onset of the West Asia conflict.

Based on the above assessment, the scenario weights of 80:10:10 for the central, downside and
upside scenarios, respectively, are considered appropriate for an unbiased estimation of the impact of
macro-economic factors on ECL. The key scenario assumptions incorporate external economic forecasts and

management estimates to ensure objectivity and balance in the measurement of credit risk. The Company
will continue to closely monitor macro-economic conditions, geopolitical developments and portfolio
performance, and will revise scenario weights and ECL provisions, as necessary, in response to emerging trends
and uncertainties.

The Company uses multiple economic factors and tests their correlations with past observed default rates
witnessed for building its forward economic guidance (FEG) model. During the current year, the Company
evaluated various macro factors such as GDP growth rates, growth of bank credit, wholesale price index (WPI),
consumer price index (CPI), unemployment rate, crude oil prices and policy interest rates etc.

Real GDP (year on year rate) and unemployment rate (year on year rate with lag effect) reflected higher and
acceptable correlation with past observed default rates and basis their linkage with Company's business were
considered appropriate by the Management . Unemployment has a direct relation with the income levels and
so with the growth of the economy from an expenditure side. GDP has a direct relation with the overall income
levels and with the broader growth of the economy from both income and output side. Accordingly, both these
macro-variables directly and indirectly impact the economy. These factors were assigned appropriate weights
to measure ECL in forecast economic conditions.

For unemployment, the Company has relied on data published by a leading business information provider
tracking Indian economic indicators. In FY 2025-26, unemployment rate over the quarters has been oscillating
around 6.3-7.7%. For the central scenario, it has considered the current unemployment level based on a
quarterly average of 6.7% and assumed a gradual normalisation towards a long-term average of 5.2% by end
of FY2027. Under the downside scenario, unemployment is assumed to peak at 11.5%, followed by a mean
reversion trend, normalising to approximately 7.4%. In the upside scenario, factoring in improving employment
trends and industrial recovery indicated by various surveys and studies, unemployment is assumed to improve
to a best case level of 3.3% by June-September 2027, before reverting to the long-term average of 7.4%.

For Real GDP growth, the Company has based its assumptions on projections published by the Reserve Bank
of India (RBI). With Real GDP growth at 7.3% year on year in Q4 FY 2025-26, it has adopted the RBI's projected
growth rate of 6.9% year on year as the central scenario, with growth moderating to 6.3% over a three year
horizon. In the downside scenario, considering ongoing uncertainties such as geopolitical developments
and tariff related risks, GDP growth is assumed to decline to 3.3% in Q2 FY2027, aligned with the lowest pre
COVID-19 levels, before normalising to around 6.3% within the following two years. In contrast, the upside
scenario assumes an optimistic growth rate of 10.3% in Q2 FY2027, consistent with the highest pre COVID-19
levels, with growth averaging back to 6.3% over the subsequent two years.

50 Employee stock option plan

(A) Employee stock option plan of Bajaj Finance Limited

The Company has an Employee Stock Option Plan, 2009 ('ESOP Plan) duly approved by its Board of
Directors and shareholders. As of 31 March 2025, total number of equity shares approved and reserved for
issue under the ESOP plan were 35,071,160 equity shares of face value of C 2 each. The ESOP plan covers
employees of the Company and that of its Group companies including parent, subsidiaries, associates and
any Successor company thereof.

As of 31 March 2026, consequent to the sub-division of equity shares from a face value of C 2 each into C 1
each and the issuance of bonus equity shares in the ratio of 4:1, total number of equity shares reserved for
issue under the ESOP Plan were proportionately adjusted to 350,711,600 equity shares of face value C 1 each.

The options issued under the ESOP Plan vest over a period of not less than 1 year and not later than 5
years from the date of grant with the vesting condition of continuous employment with the Company or
the Group except in case of death and retirement where the vesting would happen immediately.

The Nomination and Remuneration Committee of the Company has approved the following grants to
eligible senior and middle level executives of the Company and its subsidiaries in accordance with the
ESOP Plan. Details of grants given and the related disclosures up to the reporting date under the scheme,
duly adjusted for sub-division of shares and issue of bonus shares thereon, are given as under:

Method used for accounting for share based payment plan:

The Company has used the fair value method to account for the compensation cost of stock options to
employees. The fair value of options used are estimated on the date of grant using the Black - Scholes
Model. The key assumptions used in Black - Scholes Model for calculating fair value as on the date of
respective grants are:

(B) Employee stock option plan of Bajaj Finserv Limited

The Nomination and Remuneration Committee of the holding Company has approved grant of 183,050 stock
options at an exercise price of C 1,482.64, adjusted for split and bonus, having a bullet vesting of 5 years to
select employees of the Company in accordance with the Stock Option Scheme of the Holding Company. The
weighted average fair value of the option granted is C 689.20. There has been no vesting and excercise during
the year. As of 31 March 2026, the number of stock option outstanding (net of cancellation) is 119,930.

The Holding Company has used the fair value method to account for the compensation cost of stock options
to employees. The fair value of options used are estimated on the date of grant using the Black - Scholes
Model. The key assumptions used in Black - Scholes Model for calculating fair value as on the date of grant is:

51 Ultimate beneficiary

No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other
sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities
('Intermediaries'), with the understanding, whether recorded in writing or otherwise, that the Intermediaries
shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Company ('Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf of
the ultimate beneficiaries.

No funds have been received by the Company from any person(s) or entity(ies), including foreign entities
('Funding Parties'), with the understanding, whether recorded in writing or otherwise, that the Company shall,
directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party ('Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf of
the ultimate beneficiaries.

53 Disclosure pertaining to stock statement filed with banks or financial institutions

The Company has availed facilities (secured borrowings) from the lenders inter alia on the condition that, the
Company shall provide or create or arrange to provide or have created, security interest by way of a first pari
passu charge of the loans. Security interest is created by charge creation towards security and debenture
trustee on behalf of security holders and debenture holders.

For the financial year ended 31 March 2026 and previous year ended 31 March 2025, the quarterly statements
or returns of current assets filed by the Company with banks or financial institutions are in agreement with
books of accounts.

(G) Details of penalties and strictures imposed by RBI and other regulators
Current year:

No penalty levied during the year
Previous year:

IRDAI levied a penalty of C 2 crore on Bajaj Finance Limited on 15 July 2024 for non-adherence of IRDAI
(Registration of Corporate Agents) Regulations, 2015, (i) with respect to reconciliation of commission
and professional fees received and that reported to the Authority; and (ii) with respect to maintenance of
records of customer documentation. Further, IRDAI also issued additional directions to the Company and
advised the Company to comply with those directions in a time-bound manner. The Company had taken
necessary corrective actions in this respect.

54 The disclosures as required by Master Direction - Reserve Bank of India (Non-Banking
Financial Companies - Financial Statements: Presentation and Disclosures) Directions,
2025 as amended from time to time (Contd.)

The Liquidity Coverage Ratio (LCR) is one of the key parameters closely monitored by RBI to enable a
more resilient financial sector. The objective of the LCR is to promote an environment wherein Balance
Sheet carries a strong liquidity for short-term cash flow requirements. To ensure strong liquidity NBFCs
are required to maintain adequate pool of unencumbered high-quality liquid assets (HQLA) which can be
easily converted into cash to meet their stressed liquidity needs for 30 calendar days. The LCR is expected
to improve the ability of financial sector to absorb the shocks arising from financial and/or economic
stress, thus reducing the risk of spill over from financial sector to real economy.

The Liquidity Risk Management of the Company is managed by its treasury team under the guidance from
the Asset Liability Committee (ALCO) governed by Board approved Liquidity Risk Framework and Asset
Liability Management policy. The LCR levels for the Balance Sheet date is derived by arriving the stressed
expected cash inflow and outflow for the next 30 days. To compute stressed cash outflow, all expected
and contracted cash outflows are considered by applying a stress of 15%. Similarly, inflows for the
Company is arrived at by considering all expected and contracted inflows by applying a haircut of 25%. The
LCR is computed by dividing the stock of HQLA by its total net cash outflows over 30 days stress period.

The borrowing profile of the Company is well diversified across Debt and Money Markets, Bank borrowings,
Deposits, External Commercial Borrowings and Securitisation to ensure that there arent any undue
concentration on the funding sources. The Company further ensures minimal dependence on short-term
liabilities to reduce stress on cash flows. As mandated by the Board approved policy, all derivative
transactions are done for the purpose of hedging and Variation Margin settlements are done in
concurrance with RBI guidelines and this ensures any impact on maintenance of LCR due to sudden
collateral calls is limited . Additionally, Company does not have any unhedged foreign currency exposure
on its Balance Sheet and hence the impact on LCR due to currency mismatch is NIL.

The Company for purpose of computing outflows, has considered: (1) all the contractual debt repayments,
(2) committed credit facilities contracted with the subsidiaries and customers, and (3) other expected or
contracted cash outflows. Inflows comprise of: (1) expected receipts from all performing loans, and (2)
liquid investments which are unencumbered and have not been considered as part of HQLA.

For the purpose of HQLA the Company considers: (1) Unencumbered Government securities, (2) Cash
and Bank balances and (3) Pledged Government Securities for purpose of Statutory Liquid Ratio (SLR)
with haircut of 20%.

(V) Overseas Assets

The Company does not have any joint ventures and subsidiaries aboard.

(W) Off-Balance sheet SPVs sponsored

The Company does not have any off-Balance sheet SPVs sponsored.

(X) Participation in currency futures and currency options

The Company has not undertaken any transaction during the current year and previous year for currency
futures and options.

(Y) Net Profit or Loss for the period, prior period items and changes in accounting policies

There are no prior period items which are impacting Company's current year Profit and Loss.

(Z) Revenue recognition

There are no such circumstances in which revenue has been postponed pending the resolution of
significant uncertainties.

(AA) Consolidated financial statement (CFS)

The Company prepares consolidated financial statement considering all its underlying subsidiaries
and associates.

(AB) Divergence in asset classification and provisioning

No disclosure on divergence in asset classification and provisioning for NPAs is required with respect to
RBI's supervisory inspection for the year ended 31 March 2025 and for the year ended 31 March 2024 as
per the requirement of the Master Direction - Reserve Bank of India (Non-Banking Financial Companies -
Financial Statements: Presentation and Disclosures) Directions, 2025, as amended from time to time.

(AC) Credit default swap

There are no transaction during the year.

(AD) Non fund based credit facilities

There are no transaction during the year.

(AE) Area of operation

The Company operates in India and do not have any joint ventures and overseas subsidiaries.

58 Disclosures pertaining to RBI Direction - RBI/DOR/2025-26/359 DOR.ACC.REC.
No.278/21.04.018/2025-26 - Reserve Bank of India (Non-Banking Financial Companies
— Financial Statements: Presentation and Disclosures) Directions, 2025 dated 28
November 2025, as amended: (Contd.)

(I) Read with RBI Direction - RBI/DOR/2025-26/357 D0R.STR.REC.276/21.04.048/2025-26 Reserve Bank
of India (Non-Banking Financial Companies - Resolution of Stressed Assets) Directions, 2025 and RBI/
DOR/2025-26/347 D0R.CRE.REC.No.266/07-01-008/2025-26 - Reserve Bank of India (Non-Banking
Financial Companies-Credit Facilities) Directions, 2025 dated 28 November 2025. as amended:

The Company has not lent any funds during the year ended 31 March 2026 for project finance activities
nor has any recoverable balance as at the same date.

59 Amounts less than C 50,000 have been shown at actuals against respective line items statutorily required
to be disclosed.