DIRECTORS' REPORT

Your directors have pleasure in presenting the thirty-ninth Annual Report along with the audited standalone
and consolidated financial statements for Financial Year 2025-26 (or FY2026).

Company overview

Bajaj Finance Limited, (the 'Company' or 'BFL' or 'Bajaj Finance'), is a public limited company incorporated
on 25 March 1987 under the Companies Act, 1956. The Company is listed on BSE Limited and National Stock
Exchange of India Limited. The Company stood at 8th rank based on average market capitalisation from 1 July
2025 to 31 December 2025 as per Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (the 'SEBI Listing Regulations'). It is also registered as a corporate agent with
the Insurance Regulatory and Development Authority of India ('I R DAI').

Bajaj Finance is one of India's leading and most diversified financial services companies, serving 119 million
customers, digitally via our app and web and at 4,098 locations and 242,000 active distribution points across
the country. At the heart of our business lies innovation and financial inclusion. For over 38 years, the Company
has served India by enabling access to wide range of financial services, from loans and fixed deposits to
payments and investments to wide spectrum of customers.

Financial Results

The highlights of the standalone financial results are given below:

Transfer to Reserve Fund

Under section 45-IC (1) of Reserve Bank of India ('RBI') Act, 1934, non-banking financial companies ('NBFCs')
are required to transfer a sum not less than 20% of its net profit every year to reserve fund before declaration of
any dividend. Accordingly, the Company has transferred a sum of C 3,562 crore to its reserve fund.

Pursuant to section 71 of Companies Act, 2013 (the 'Act') read with rule 18 of the Companies (Share Capital
and Debentures) Rules, 2014, the Company, being an NBFC, is exempt from creating debenture redemption
reserve in respect of privately placed debentures including the requirement to invest up to 15% of the amount
of debentures maturing during the next financial year. However, the Company maintains sufficient liquidity
buffer to fulfil its obligations arising out of debentures. In case of secured debentures, an asset cover of at least
100% is maintained at all times.

Dividend

Pursuant to the provisions of regulation 43A of the SEBI Listing Regulations and in accordance with the
RBI guidelines, the Company has in place a dividend distribution policy, which sets out the parameters and
circumstances to be considered by the Board in determining the distribution of dividend to its shareholders
and/or retaining profit earned. The said policy is annexed to this Report and is also available on the website
of the Company athttps://cms-assets.bajajfinserv.in/is/content/bajajfinance/dividend-distribution-policy-
v4?scl=1 &fmt=pdf

Further, there has been no change in any of the parameters in the policy during the year.

In accordance with the aforesaid policy, the Board, after taking into account various aspects and in compliance
with the said regulation, at its meeting held on 29 April 2026 has recommended a final dividend for members
approval, as mentioned below:

Final Dividend:

Final dividend of C 6 per equity share (600% of face value of C 1) for the financial year ended 31 March 2026 is
recommended for consideration of the members at the ensuing Annual General Meeting ('AGM'). This includes
a special payout of C 0.60 per equity share out of the exceptional gain on sale of shares of Bajaj Housing
Finance Ltd., subsidiary of the Company. The total dividend pay-out on account of final dividend is C 3,733 crore,
considering the capital base as on 31 March 2026.

Total dividend proposed for the year does not exceed the ceilings specified in the relevant RBI Directions.

The record date fixed for the purpose of final dividend is 30 June 2026.

The said dividend will be taxable in the hands of the members of the Company in accordance with the
applicable Income Tax provisions. For further details on taxability, members are requested to refer to the Notice
of 39th Annual General Meeting.

Working Results of the Company

On a consolidated basis, the Company has recorded AUM growth of 22% and growth in profit after tax of 15%
in FY2026 as against AUM and profit after tax growth of 26% and 16%, respectively, in FY2025. With its strong
AUM and profit growth in FY2026, the Company has further increased its share in the financial services sector
in India. Return on average assets ('ROAA') and return on average equity ('ROAE') for FY2026 was 4.3% and
18.1% respectively on a consolidated basis.

The Company's business model continues to generate healthy pre-impairment operating profits enabling it to
withstand higher credit losses in times of stress. It remains well capitalised with a capital-to-risk weighted asset
ratio ('CRAR') of 21.55% as on 31 March 2026 - making it among the best capitalised large NBFCs in India.

As a result of its deeply embedded risk culture and robust risk management practices, the Company's portfolio
quality as of 31 March 2026 continues to remain strong. The Company's consolidated Gross NPA at 1.01% and
Net NPA at 0.41% are among the lowest in the industry.

Using its robust risk management and portfolio monitoring framework, the Company absorbed enhanced credit
costs based on emerging trends across its different portfolios. It holds a management overlay provision on
account of volatile macroeconomic factors of C 134 crore on consolidated basis as on 31 March 2026.

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• Number of new loans booked: 119 million

• AUM grew by 22% to C 509,975 crore

• Net interest income ('NII') rose by 21% to C 44,110 crore

• Net total income ('NTI') rose by 21% to C 53,324 crore

• Total operating expenses ('Opex') grew by 19% to C 17,776 crore

• Opex to NTI stood at 33.3%

• Pre-impairment operating profit rose by 22% to C 35,548 crore

• Impairment on financial instruments was C 9,482 crore

• Profit before tax ('PBT') increased by 17% to C 25,817 crore

• Profit after tax ('PAT') increased by 15 % to C 19,332 crore

• Capital adequacy ratio as of 31 March 2026 was 21.55%, which is well above the RBI norms.

Tier I adequacy ratio was 20.67%.

v_/

For more details on the performance of the Company and business segments refer Management Discussion
and Analysis.

Material Changes and Commitments

There were no material changes and commitments affecting the financial position of the Company which
occurred between the end of the financial year and the date of this Report.

Subsidiaries, Associates and Joint Venture

The Company has the following subsidiaries and associate companies as on 31 March 2026:

A separate statement containing the salient features of the subsidiaries and associates in the prescribed form
AOC-1 is attached to the consolidated financial statements.

During FY2026, no new subsidiary or associate was incorporated/acquired. The Company has not entered into a
joint venture with any other company.

More details on subsidiaries and associates, including their performance, business, etc. are given in the
Management Discussion and Analysis.

Particulars of Loans, Guarantees and Investments

The Company, being an NBFC registered with the RBI and engaged in the business of giving loans in the
ordinary course of its business, is exempted from complying with the requirements to disclose in the financial
statement the full particulars of the loans given, investment made, guarantee given, or security provided.

Strategic Investments

• Protectt.ai Labs Private Limited ('Protectt.ai')

During the year under review, the Company has acquired a 12% equity stake in Protectt.ai for an aggregate
consideration of up to C 66 crore.

Protectt.ai is a cybersecurity product company offering solutions across mobile application security,
mobile device security, mobile transaction security, and AI security.

Incorporated in 2020, Protectt.ai has built an active customer base of over 60 clients with zero customer
attrition to date. While its current customer base is entirely domestic, Protectt.ai has recently established
offices in the Middle East and the United States to support international expansion.

• Status of other strategic investments are as under:

The Company during the year scaled down its investments in RBL Bank Limited.

Further details of investments are provided in the financial statements.

Directors and Key Managerial Personnel ('KMP')

A. Change in Directors during the financial year:

i. Anup Saha (DIN: 07640220)

The Board, based on the recommendation of Nomination and Remuneration Committee elevated
Anup Saha as the Managing Director of the Company effective 1 April 2025 for the remainder of his
tenure i.e. up to 31 March 2028.

However, during the year under review, Anup Saha resigned as Managing Director and Director from
the Board of the Company with effect from close of business hours on 21 July 2025 due to personal
reasons. Accordingly, he ceased to be the KMP within the meaning of section 2(51) of the Act.

ii. Rajeev Jain (DIN: 01550158)

The Board at its meeting held on 20 March 2025, approved the elevation of Rajeev Jain as
Executive Vice Chairman in the capacity as executive director for a period of three years from
1 April 2025 till 31 March 2028.

Consequent to the resignation of Anup Saha and in the interest of continuity of management,
the Board, pursuant to the recommendation of Nomination and Remuneration Committee of the
Company and the applicable provisions of the Companies Act, 2013, has, in addition to Rajeev Jain's
existing powers and roles as Executive Vice Chairman of the Company, vested him with the powers,
roles and responsibilities of management of the Company and re-designated him as Vice Chairman
and Managing Director of the Company for the remainder of his term.

B. Directors liable to retire by rotation:

Rajiv Bajaj (DIN: 00018262), being the Director longest in office among those liable to retire by rotation, shall
retire at the ensuing Annual General Meeting and has expressed his intention not to seek re-appointment.

Accordingly, it is proposed to change the status of Sanjiv Bajaj (DIN: 00014615), presently a Director not
liable to retire by rotation, as a Director liable to retire by rotation, subject to the approval of the Members.

Brief details of Sanjiv Bajaj are given in the Notice of 39th AGM.

C. KMPs:

Save and except as stated above, there were no other changes in the KMPs during FY2026.

Composition of Committees

The details of all the Board Committees including composition, attendance, terms of reference, etc, are provided
under Report on Corporate Governance. Pursuant to section 177 and section 135 of Act, the composition of
Audit Committee and Corporate Social Responsibility Committee are provided hereunder:

• Audit Committee

The composition as on 31 March 2026 is as follows:

Further details on Audit Committee, brief terms of reference, and attendance records of members are
given in the Report on Corporate Governance.

During FY2026, all recommendations of the Audit Committee were accepted by the Board.

Corporate Social Responsibility ('CSR')

The composition as on 31 March 2026 is as follows:

Further, Anami N Roy, has been inducted as a member of the Committee with effect from 1 April 2026.

The CSR policy has been hosted on the website of the Company and can be accessed athttps://cms-
assets.bajajfinserv.in/is/content/bajajfinance/corporate-social-responsibility-v8?scl=1 &fmt=pdf.

The CSR obligation of the Company for FY2026 is C 333.97 crore. As on 31 March 2026, total amount spent
on CSR activities by Company is C 318.81 crore.

As per section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014,
as amended, the Company is required to transfer any unspent amount, pursuant to any ongoing project
undertaken by the Company in pursuance of its CSR policy, within a period of thirty days from the end of
the financial year to a special account opened by the Company in that behalf for that financial year in any
scheduled bank called Unspent Corporate Social Responsibility Account.

The unspent amount primarily pertains to ongoing projects commenced during the year under review. The
ongoing projects generally span over a period of 2 to 3 years and have milestone-based payments as per
agreed outcomes. The earmarked amount for FY2026 for these ongoing projects have been spent and the
remaining are due in the upcoming years, and hence the shortfall. Accordingly, the Company has opened
the prescribed bank account to transfer unspent amount of C 15.16 crore.

Pursuant to rule 8(1) of Companies (Corporate Social Responsibility Policy) Rules, 2014, Annual Report on
CSR activities is annexed to this Report.

Customer Engagement

Customer engagement and experience remain foundational pillars of our organisation. We are committed to
upholding customer fairness in both letter and spirit across all interactions. Proactive engagement enables
institutions to generate actionable insights, strengthen risk management, ensure regulatory compliance, and
accelerate the adoption of new technologies. In an increasingly dynamic environment, prioritising customer
experience is essential to maintaining competitiveness, deepening relationships, and driving sustainable,
long-term growth.

To strengthen customer engagement and oversight, the Board has constituted a Customer Service Committee
('CSC') led by an Independent Director. Additionally, a Customer Service Standing Committee enables senior
management to regularly review initiatives aimed at delivering an exceptional customer experience.

The Company adopts a customer-centric approach through multiple communication and service channels that
ensure timely resolution of customer queries. Dedicated customer experience teams across operations and
businesses drive continuous improvement, measurement, and a strong customer-first culture.

Further details on the Customer Service Committee, brief terms of reference and attendance record of
members are given in the Report on Corporate Governance.

Initiatives of the Company towards customer engagement are detailed in the Management Discussion
and Analysis.

Risk Management Framework

The Board of Directors have adopted a risk management policy for the Company which provides for
identification of key events/risks impacting the business objectives of the Company and attempts to develop
risk policies and strategies to ensure timely evaluation, reporting and monitoring of key business risks.

This framework, inter alia, provides a set of components that provide the foundations and organisational
arrangements for designing, implementing, monitoring, reviewing and continually improving Risk Management
throughout the organisation. It covers principles of risk management, risk governance with roles and
responsibilities, business control measures, principle risks and business continuity plan. The Management
identifies and controls risks through a defined framework in terms of the aforesaid policy.

The Board is of the opinion that there are no elements of risk that may threaten the existence of the Company.

The Board has established a comprehensive Company-wide risk management approach that ensures risks are
identified, assessed, monitored, and managed in a structured and consistent manner across all business and
support functions.

Risk Management Framework of the Company comprises of:

Key Material Risks - The nature of the Company's business activities, coupled with the evolving regulatory
landscape and broader external environment, exposes the Company to a range of risks. These risks are
reviewed and monitored regularly to maintain oversight on change in risk profile.

More detailed discussion on the Company's risk management and portfolio quality is covered in the
Management Discussion and Analysis.

Fraud monitoring and reporting

During the year under review, instances of frauds were reported to the "Special Committee for Monitoring and
follow up of cases of fraud" (hereinafter referred as 'FMC) and Audit Committee of the Board. The aggregate
amount involved in these cases was approximately C 65.16 crore. These cases, inter alia, included forgery,
identity theft and misappropriation of funds.

Out of the above, an aggregate amount of approximately C 15.37 crore was found to have involvement
of employee(s). Following the detection, the services of concerned employee(s) were terminated. As a
preventive measure, the Company has also undertaken steps to educate other employees through targeted
communication and internal awareness initiatives to strengthen vigilance and mitigate the risk of similar
incidents in the future.

Approximately C 13.93 crore has been recovered till date. None of the above reported frauds had involvement
of the Management or an employee having a significant role in the Company's internal control system over
financial reporting.

Further, the same was also reported to RBI and Statutory Auditors. The Statutory Auditors, in turn, have also
brought these cases to the attention of the Audit Committee pursuant to circular issued by National Financial
Reporting Authority ('NFRA') dated 26 June 2023.

The Company has a robust and evolving fraud prevention & detection framework. key drivers includes enhanced
front-end validations, automated fraud deduplication, and advanced early warning systems with analytics.

Further details on the FMC, brief terms of reference and attendance record of members are given in the Report
on Corporate Governance.

Internal Capital Adequacy Assessment Policy ('ICAAP')

Pursuant to Master Direction - Reserve Bank of India (Non-Banking Financial Companies - Prudential Norms
on Capital Adequacy) Directions, 2025 issued by the RBI in supersession of the erstwhile Master Direction -
Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023 issued
by RBI on 19 October 2023 ('RBI Scale Based Regulations'), NBFCs are required to have an ICAAP in place.

The objective of ICAAP is to ensure availability of adequate capital to support all risks in business and also
to encourage an NBFC to develop and use better internal risk management techniques for monitoring and
managing its risks. Accordingly, the Company has framed an ICAAP policy and document.

The document encompasses the assessment of material risks to which the Company is exposed and measures
taken to mitigate those risks. It has completed its ICAAP for FY2025 in line with its Board approved ICAAP
policy. Based on assessment of all the material risks applicable to it and reviewing the controls and risk
mitigation techniques, the Company is not required to maintain any additional capital.

Information Technology Governance and Cyber Security

In accordance with IT Governance framework, the Company has put in place policies which, inter alia, include
Information Technology Policy, Information Security Policy, Cyber Security Policy, Business Continuity Policy,
Outsourcing Policy, Cyber Crisis Management Plan, Access Control Policy and Information Security Incident
Management Policy.

During the year under review, a cyber security awareness programme was conducted for senior management
and CXOs. It, inter alia, covered, emerging technology risks like AI and quantum computing, new developments
and issues relating to cyber and information security, understanding of cyber security trends including recent
cyber frauds and attacks, etc. Further, on an annual basis, employees of the Company have undergone IT
security trainings.

The Company continues to enhance cyber security and information security aspects while transforming to
a customer-centric digital enterprise. It has the capability to offer remote access for identified IT vendors/
partners to enable full resources for user support, data center support, application maintenance and testing.

All IT systems are compliant to ISO 27001 Information Security Management System and ISO 22301 Business
Continuity Standard. The Company also has a dedicated cyber security and information security team to ensure
technical expertise and regulatory as well as internal compliance for Information Technology.

There is an active engagement with stakeholders, including senior management team, in scenario-based cyber
drills to evaluate our readiness to respond to potential cyber threats. Furthermore, security operations are being
overhauled to strengthen our detection and response capabilities, while also advancing our proactive threat¬
hunting measures. Key endeavours include enhancing cyber insurance coverage and scope, implementation
of security measures like Software Bill of Material (SBOM), establishing on premises 24X7 Security Operations
Center (SOC), formulating AI Governance and security policy, dedicated team for AI governance and security.

The Company has implemented an Outsourcing Policy in line with regulatory requirements. The Company has
an Outsourcing Compliance Committee. The Committee is responsible for:

• Evaluation of the risks and materiality of outsourced activities;

• Ensuring that periodic review of outsourcing arrangements is conducted by the Company; and

• Putting in place a central database on outsourcing.

Periodic risk-based information security assessment is conducted for vendors who are covered under "IT
Outsourcing" as per regulatory guidelines. To enhance vendor governance, implemented vendor lifecycle
management platform. Furthermore, to mitigate supply chain risks, improved secure coding guidelines
for developers. Additionally, compliance teams have been established within each business unit to ensure
alignment with regulatory requirements.

Number of Meetings of the Board

Eight (8) meetings of the Board were held during FY2026. Details of the meetings and attendance thereat
forms part of the Report on Corporate Governance.

Independent Directors' Meeting

Pursuant to the Act and SEBI Listing Regulations, the independent directors must hold at least one meeting in a
financial year without attendance of Non-independent directors and members of the Management. Accordingly,
independent directors of the Company met on 23 March 2026 and:

• noted the report of performance evaluation of the Board and committees for the FY2026;

• reviewed the performance of Non-independent directors and the Board as a whole;

• reviewed the performance of the Chairman of the Board, taking into account the views of executive and
Non-executive directors; and

• assessed the quality, quantity, and timeliness of flow of information between the Company's Management
and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Suggestions of the Independent Directors were noted by the Board.

In addition, the independent directors have a separate meeting with the Senior Management ('SMT'), during
which, the SMT is encouraged to express their views and concerns pertaining to the business. Suggestions
from the directors are noted by the Management.

Declaration by Independent Directors

All the independent directors have submitted a declaration of independence, stating that they meet the
criteria of independence provided under section 149(6) of the Act read with regulation 16 of the SEBI
Listing Regulations, as amended. They also confirmed compliance with the provisions of rule 6 of Companies
(Appointment and Qualifications of Directors) Rules, 2014, as amended, relating to inclusion of their name in
the databank of independent directors.

The Board took on record the declaration and confirmation submitted by the independent directors regarding
them meeting the prescribed criteria of independence, after undertaking due assessment of the veracity of the
same in terms of the requirements of regulation 25 of the SEBI Listing Regulations.

In the opinion of the Board, the independent directors fulfil the conditions specified in the Act read with rules
made thereunder and have complied with the code for independent directors prescribed in schedule IV to
the Act.

Formal Annual Evaluation of the performance of the Board, its Committees and Directors

Pursuant to section 178 of the Act, the Nomination and Remuneration Committee ('NRC') and the Board
has decided that the evaluation shall be carried out by the Board only and the NRC will only review its
implementation and compliance.

Further, as per schedule IV of the Act and provisions of the SEBI Listing Regulations, the performance
evaluation of independent directors shall be done by the entire Board excluding the director being evaluated, on
the basis of performance and fulfilment of criteria of independence and their independence from Management.
On the basis of the report on performance evaluation, it shall be determined whether to extend or continue the
term of appointment of independent director.

Accordingly, the Board has carried out an annual performance evaluation of its own performance, that of its
Committees, Chairperson and individual directors.

The manner in which formal annual evaluation of performance was carried out by the Board for the year 2025-26
is given below:

• Based on the criteria approved by the Board, a questionnaire-cum-rating sheet was circulated for seeking
feedback of the directors with regards to the performance of the Board, its Committees, the Chairperson,
and individual directors.

• From the individual ratings received from the directors, a report on summary of ratings in respect of
performance evaluation of the Board, its Committees, Chairperson, and individual directors for the year
2025-26 and a consolidated report thereof were arrived at.

• The NRC reviewed the implementation and compliance of the performance evaluation at its meeting held on
17 March 2026.

• The report of performance evaluation so arrived at was then discussed and noted by the Board at its meeting
held on 23 March 2026.

• Based on the report and evaluation, the NRC and Board at their above said meetings, determined that the
appointment of all independent directors may continue.

• Details on the evaluation of the Board, Non-independent directors, and Chairperson of the Company as
carried out by the independent directors at their separate meeting held on 23 March 2026 have been
furnished in a separate paragraph elsewhere in this Report.

• During the year under review, the process followed by the Company was reviewed by the NRC, which opined
these to be compliant with applicable provisions and found it to be satisfactory.

• The evaluation criteria for Independent Directors as required under Chapter VI-D of the SEBI Master Circular
dated 30 January 2026 can be accessed athttps://cms-assets.bajajfinserv.in/is/content/bajajfinance/
performance-evaluation-criteria-?7-january-?0?5-finalpdf?scl=1 &fmt=pdf. The feedback provided by the
directors was noted.

Other than Chairperson of the Board and NRC, no other director has access to the individual ratings given

by directors.

Succession Planning

The Company has a structured and institutionalised succession planning framework designed to ensure

leadership continuity under both anticipated and unforeseen circumstances. The framework is reviewed and

refreshed annually to remain aligned with the Company's strategic priorities and evolving business needs.

Key elements of the framework include:

• Strategic Workforce Alignment: Succession planning is anchored to the Company's Long-Range Strategy
(LRS) and Annual Operating Plan (AOP), ensuring that leadership capability requirements are proactively
identified and planned in line with future strategic objectives.

• Performance and Culture Linked Assessment: The performance appraisal process enables consistent
identification of leaders demonstrating sustained performance against goals, as well as leadership
behaviours aligned to the organisation's cultural anchors.

• Enterprise Talent Management Process: A structured bi-annual Talent Management exercise identifies
Top Talent, High Potential leaders, and Core Contributors, culminating in the development of a robust
succession bench for senior and critical leadership roles.

• Leadership Development through Role Rotation: A formal Job Rotation Policy supports the development of
senior leaders through planned role transitions, aimed at broadening exposure, strengthening cross-functional
understanding, and building well rounded leadership capability.

Remuneration Policies

1. Policy on Directors' Appointment and Remuneration

Pursuant to section 178(3) of the Companies Act, 2013 and regulation 19(4) read with Part D of schedule
II of the SEBI Listing Regulations, the Board has framed a Remuneration Policy. This policy, inter alia,
lays down:

• The criteria for determining qualifications, positive attributes, and independence of directors; and

• Broad guidelines of compensation philosophy and structure for Non-executive directors, key managerial
personnel and other employees.

Hitherto, Company has not paid any commission and sitting fees to its Independent Directors for attending
separate meetings of Independent Directors. Considering the value addition from these meetings to
Management and the Board as a whole, the Board at its meeting held on 29 April 2025, has approved the
payment of sitting fees of C 100,000 and Commission of C 500,000 per meeting, for separate meeting of
Independent Directors. Consequently, the policy was amended.

In view of detailed RBI Guidelines for NBFCs concerning compensation of KMP and SMT, the Company has
in place a specific policy to this effect.

2. Policy for Compensation of KMP and SMT pursuant to RBI Guidelines

Pursuant to RBI Directions, the Company has adopted a Board approved policy exclusively governing
compensation payable to KMP and SMT. During the year under review, in line with best practices followed
by banks, the categories of employee covered under the policy has been amended to include the
identified Material Risk Takers ('MRT'). This policy lays down detailed framework, inter alia, encompassing
the following:

• Principles of compensation;

• Compensation components;

• Principles of variable pay;

• Deferral of variable pay;

• Compensation for control and assurance function personnel; and

• Provisions for malus and clawback and circumstances under which application of malus and clawback is
to be considered.

The aforesaid policies can be accessed at:

• https://cms-assets.bajajfinserv.in/is/content/bajajfinance/remuneration-policy-companies-act-2013-
v4?scl=1&fmt=pdf and

• https://cms-assets.bajajfinserv.in/is/content/bajajfinance/annexure-4f-policy-for-compensation-of-
kmp-and-senior-managementpdf?scl=1&fmt=pdf

As per the requirements of the RBI Master Directions and SEBI Listing Regulations, details of all pecuniary
relationship or transactions of the Non-executive directors vis-a-vis the Company are disclosed in the
Report on Corporate Governance.

Related Party Transactions

All contracts/arrangement/transactions entered by the Company during FY2026 with related parties
were in compliance with the applicable provisions of the Act and SEBI Listing Regulations. Approval of the
Audit Committee was obtained for all related party transactions entered during FY2026 as per SEBI Listing
Regulations. Such transactions are reviewed by the Audit Committee on a quarterly basis.

The Company had engaged an independent law firm to review the transactions carried out with related parties
during FY2026, to affirm that the transactions were entered into on an arm's length basis. The said firm, based
on its review has concluded that the aforementioned transactions were entered into on an arm's length basis.

Pursuant to regulation 23(1) of SEBI Listing Regulations, 2015, a transaction with a related party was
considered material if the transaction, individually or taken together with previous transactions during a
financial year, exceeded C 1,000 crore or 10% of the annual consolidated turnover of the Company as per the
last audited financial statements, whichever was lower.

Accordingly, approval of shareholders was obtained at the last Annual General Meeting held on 24 July 2025 for
transactions with Bajaj Housing Finance Ltd., (subsidiary) for an aggregate amount of C 12,612 crore and with
Bajaj Life Insurance Ltd., fellow subsidiary (formerly know as Bajaj Allianz Life Insurance Company Ltd.) for an
aggregate amount of C 1,445 crore.

Details of transactions with related parties during FY2026 are provided in the notes to the financial statements.
Also, details of transactions with related parties during FY2026 as reported to the stock exchanges in the
prescribed format can be accessed athttps://www.aboutbajajfinserv.com/finance-investor-relations-rpt-
disclosure.

With effect from 19 December 2025, SEBI has revised the criteria for determination of material related party
transactions. Accordingly, a transaction with a related party shall be considered material if the transaction,
individually or taken together with previous transactions during a financial year, exceeds the thresholds
specified in schedule XII of the said regulations.

Accordingly, the Company proposes to seek approval of the shareholders at the upcoming Annual General
Meeting for material related party transaction with Bajaj Housing Finance Ltd., as under:

Further details are provided in the Notice of the 39th Annual General Meeting.

All transactions of the Company were on an arm's length basis and in the ordinary course of business.

No transaction required approval under section 188 of the Act, nor any transaction requires reporting
under Form AOC-2.

Annual Return

The Annual Return as provided under section 92(3) of the Act, in the prescribed form is hosted on the
Company's website and can be accessed athttps://www.aboutbajajfinserv.com/finance-investor-relations-
annual-reports.

Employee Stock Options ('ESOP')

The Company offers stock options to select employees of the Company and its subsidiaries to foster a spirit of
ownership and an entrepreneurial mindset. Because of their nature, stock options help to build a holistic, long¬
term view of the business and a sustainability focus in the Senior Management team. Stock options are granted
to tenured employees in managerial and leadership positions upon achieving defined thresholds of performance
and leadership behavior. This has contributed to the active involvement of the leadership and senior team who
are motivated to ensure long-term success of the Company. Grant of stock options also allows the Company
to maintain the right balance between fixed pay, short-term incentives, and long-term incentives to effectively
align with the risk considerations and build a focus on consistent long-term results.

BFL Employee Stock Option Scheme ('ESOP 2009') is in compliance with the SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 ('ESOP Regulations'). The scheme was modified pursuant to
a special resolution passed in the Annual General Meeting held on 24 July 2025 to include secondary market
acquisition of existing shares of the Company by the trust. No acquisition has been undertaken by the trust
under the secondary market route. The same can be accessed athttps://cms-assets.bajajfinserv.in/is/content/
bajajfinance/esop-scheme-postal-ballot-final-15-may-2024-new-for-nrcpdf?scl=1 &fmt=pdf

A certificate obtained from the Secretarial Auditors confirming that the scheme has been implemented in
accordance with the aforesaid regulations and the shareholders' resolution shall be placed before the Members
at the ensuing Annual General Meeting.

A statement giving details, as at 31 March 2026, under regulation 14 of the ESOP Regulations, is available on
the website of the Company and can be accessed athttps://www.aboutbajajfinserv.com/finance-investor-
relations-annual-reports.

Grant wise details of options vested, exercised, and cancelled are provided in the notes to the standalone
financial statements.

The Company has not issued any sweat equity shares or equity shares with differential voting rights
during FY2026.

Share Capital

During FY2026, pursuant to the approval of the Board of Directors and members of the Company, the following
changes have taken place in the share capital of the Company:

a) Sub-division of Equity Shares of the Company and issue of Bonus shares:

During the year under review, the Members approved the following corporate actions through postal ballot
on 7 June 2025:

• sub-division of one equity share of face value of C 2 (Rupees Two Only) into 2 equity shares of face
value of C 1 (Rupee One Only); and

• issue of 4 (Four) bonus equity shares of face value of C 1 (Rupee One Only) for every 1 (One)
equity share fully paid-up of C 1 (Rupee One Only) by capitalising such sums out of securities
premium account.

b) Allotment to ESOP Trust:

The Company has issued and allotted 8,195,345 equity shares of the face value of C 1 each at
respective grant prices to the trustees of BFL Employee Welfare Trust under the Employee Stock Options
Scheme, 2009.

As on 31 March 2026, the paid-up share capital of the Company stood at C 622.24 crore consisting of
6,222,481,865 equity shares of face value of C 1 fully paid-up.

Deposits

The Company accepts deposits from retail and corporate clients. As on 31 March 2026, it had a standalone
deposit book of C 68,485.55 crore, representing an annual degrowth of 4% in FY2026. Deposits contributed to
21% of Company's standalone borrowings versus 26% as at the end of FY2025.

The consolidated deposits book as on 31 March 2026 stood at C 68,533 crore. Deposit contributed to 16% of its
consolidated borrowings as on FY2026 versus 20% as at the end of FY2025.

Break-up of deposits raised on a standalone basis:

Pursuant to provisions of the RBI Act, 1934, the Company has created a charge on statutory liquid assets

amounting to C 6,499.17 crore in favour of Catalyst Trusteeship Ltd., the trustee, for Public Fixed Deposit

('FD') holders.

During FY2026, there was no default in repayment of deposits or payment of interest thereon. With a view to

reduce unclaimed deposits, the Company inter-alia has taken the following measures:

• Communication via SMS and/or email is sent to the depositor on T 1 (T=Rejection date), informing them of
the payment rejection by the depositor's bank;

• The FD Customer Service team subsequently contacts the depositor on their registered mobile number to
notify them of the rejection and request submission of updated bank account details to be linked with the
fixed deposit;

• The depositor is required to share the updated bank details along with necessary supporting documents via
email or through the branch for processing and updation;

• In cases where the depositor is not contactable, an 'Account Payee' cheque is prepared and dispatched to
the depositor's registered address within T 10 days; and

• If the cheque remains unrealised within T 30 days, an additional attempt is made through a field visit by
branch operations to establish contact with the depositor.

As on 31 March 2026, there were 19 FDs amounting to C 30.81 lakh which had matured and remained
unclaimed and interest on matured deposits amounting to C 3.39 lakh and interest on active deposits amounting
to C 3.79 lakh had also remained unclaimed.

Borrowings

The total borrowing limit approved by the shareholders pursuant to the provisions of section 180(1) (c) of the
Act stands at C 375,000 crore.

The total borrowing as on 31 March 2026 was C 322,818.39 crore. The break-up of the same is as under:

Credit Rating

During the year under review, Moody's Ratings vide their press release dated 4 August 2025, has assigned
the Company a new rating 'Baa3 Corporate Family Rating (CFR)' with outlook as 'Stable'. Simultaneously, the
Moody's Ratings has withdrawn its existing rating assigned to the Company, i.e., Baa3(Stable outlook)/P-3
long-term and short-term foreign and local currency issuer ratings, for Moody's own business reasons.

Further, S&P Global Ratings vide their report dated 14 August 2025, has upgraded the Company (issuer) credit
rating from BBB-/Positive/A-3 to BBB/Stable/A-2. S&P Global Ratings has further informed that the Standalone
Credit Profile (SACP) for the Company remains unchanged at 'bbb'.

S&P Global Ratings report mentioned that the rating upgrade is subsequent to the upward revision in the
sovereign credit rating on India to 'BBB' from 'BBB-'.

Pursuant to SEBI master circular for credit rating agencies, dated 11 July 2025, the Members of the Audit
Committee interacted with credit rating agencies, inter alia, to discuss issues on related party transactions,
internal financial controls and other material disclosures made by the management, which have a bearing on
rating of its listed non-convertible debentures (NCDs).

The brief details of the ratings received from credit rating agencies by the Company for all its outstanding
instruments are given in General Shareholder Information.

Internal Financial Controls

Internal Financial Controls laid down by the Company is a systematic set of controls and procedures to ensure
orderly and efficient conduct of its business including adherence to the Company's policies, safeguarding of its
assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records
and timely preparation of reliable financial information. Internal financial controls not only require the system to
be designed effectively but also to be tested for operating effectiveness periodically.

The Board is of the opinion that internal financial controls with reference to the financial statements are
adequate and operating effectively. The internal financial controls are commensurate with the size, scale, and
complexity of operations.

Internal Control Systems and their adequacy are discussed in more detail in Management Discussion and Analysis.
Internal Audit

The internal audit function provides an assurance to the Audit Committee/Board of Directors and the Senior
Management on the quality and effectiveness of Company's internal controls, risk management and governance
related systems and processes. In line with RBI's guidelines on Risk Based Internal Audit, the Company has
implemented a Risk Based Internal Audit Policy.

At the beginning of each financial year, an audit plan is rolled out after approval of the Audit Committee.

The Audit Committee on a quarterly basis reviews the internal audit reports based on the approved plan,
which includes audit observations, corrective and preventive actions. Closure of corrective and preventive
actions arising from the audit observations is tracked and reviewed by the internal audit team and status is
updated to the Audit Committee. The Committee also reviews adequacy and effectiveness of internal controls
based on such reports.

The Committee also has independent meetings with the internal auditor without the presence of Management.

As per RBI guidelines, quality assurance and improvement programme ('QAIP') is required to be carried out
at least once a year covering all aspects of internal audit function. Accordingly, QAIP is carried out annually
through an external agency to assess functioning of the internal audit function and adherence to the internal
audit policy.

Statutory Audit

Price Waterhouse LLP, Chartered Accountants, (Firm Registration No. 301112E/E300264) ('PWC') and Kirtane
& Pandit LLP, Chartered Accountants, (Firm Registration No. 105215W/W100057), the Joint Statutory Auditors
of the Company have conducted audit of the financial statements of the Company for the FY2026.

The Audit Report given by the Joint Statutory Auditors for FY2026 is unmodified, i.e., it does not contain any
qualification, reservation, adverse remark or disclaimer.

The information under section 143(12) read with section 134(3) (ca) of the Act is given in the section 'fraud
monitoring and reporting'.

In terms of the RBI Master Directions - Non-Banking Financial Companies Auditors' Report (Reserve Bank)
Directions, 2016, the Joint Statutory Auditors have also submitted an Additional Report dated 24 July 2025, for
FY2025 which has been filed with RBI. There were no comments or adverse remarks in the said Report as well.

Secretarial Audit

Pursuant to regulation 24A(1) of the SEBI Listing Regulations, the Members at the 38th Annual General Meeting
held on 24 July 2025, approved the appointment of M/s. Makarand M. Joshi & Co. ('MMJC'), a peer reviewed
firm of Company Secretaries in Practice as Secretarial Auditor of the Company for a term of 5 (five) consecutive
years from FY2026 till FY2030.

Pursuant to the provisions of section 204 of the Act, the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, and regulation 24A(1) of the SEBI Listing Regulations, the secretarial audit
for FY2026 was conducted by MMJC. The Secretarial Audit report in the prescribed Form MR-3 is annexed
to this Report. The report is unmodified i.e., it does not contain any qualification, reservation, adverse remark
or disclaimer.

The secretarial auditor has not reported any matter under section 143(12) of the Act, and therefore, no details
are required to be disclosed under section 134(3) (ca) of the Act.

Pursuant to regulation 24A(2) of the SEBI Listing Regulations, a report on secretarial compliance for FY2026
has been issued by MMJC, Practicing Company Secretaries and the same will be submitted with the stock
exchanges within the given timeframe. The report will also be made available on the website of the Company at
https://www.aboutbajajfinserv.com/finance-investor-relations-secretarial-compliance-reports.

Whistle-Blower Policy/Vigil Mechanism

The Company has a Whistle-Blower Policy encompassing vigil mechanism pursuant to the requirements of
section 177(9) of the Act and regulation 22 of the SEBI Listing Regulations. The whistle-blower framework
has been introduced with an aim to provide employees, directors, and value chain partners with a safe and
confidential channel to share their inputs about such aspects which are adversely impacting their work
environment. The policy/vigil mechanism enables directors, employees, and value chain partners to report their
concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or
ethics policy and leak or suspected leak of unpublished price sensitive information.

The concerns may be reported anonymously either through email or through a 'Confidential Feedback
Mechanism', which is reviewed by a committee comprising of Senior Management representatives. Pursuant
to the Whistle-Blower Policy, the summary of incidents investigated, actioned upon, founded and unfounded
are reviewed by the Audit Committee on a quarterly basis. Further, the Committee from time to time reviews
the functioning of the whistle-blower mechanism and measures taken by the Management to encourage
employees to avail of the mechanism to report unethical practices. During FY2026, no person was denied
access to the Audit Committee including the Chairman of the Audit Committee.

The Whistle-Blower Policy is uploaded on the website of the Company and can be accessed athttps://cms-
assets.bajajfinserv.in/is/content/bajajfinance/whistle-blower-policy-v-1-6?scl=1 &fmt=pdf

More details are given in the Report on Corporate Governance.

Compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 ('POSH Act')

The Company is committed to creating a healthy working environment that enables employees to work without
fear of prejudice, gender discrimination and harassment. The Company believe that all employees have the right
to be treated with fairness and dignity.

The Company has a policy on prevention of sexual harassment at the workplace. The policy is gender neutral.
This policy has been framed in accordance with the provisions of POSH Act, and rules framed thereunder.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee
under POSH Act, 2013. The policy can be accessed athttps://cms-assets.bajajfinserv.in/is/content/
bajajfinance/prevention-of-sexual-harassment-at-workplace-website-v1-6?scl=1 &fmt=pdf

Details of the complaints received during the year are as under:

Business Responsibility and Sustainability Report ('BRSR')

Pursuant to the SEBI circular dated 10 May 2021 read with SEBI Master Circular dated 30 January 2026, and
amendment in SEBI Listing Regulations, top 1,000 listed entities based on market capitalisation are required to
submit BRSR with effect from FY2023, as part of their Annual Report.

SEBI has further introduced BRSR Core, a focused sub-set of the BRSR, comprising Key Performance Indicators
('KPIs') across nine Environmental, Social, and Governance (ESG) attributes. As per the glide path outlined
in the circular, the top 500 listed entities are mandated to obtain reasonable assurance on the BRSR Core
disclosures. In compliance with the SEBI requirements, the Company has appointed SGS India Private Limited
('SGS') as an Assurance provider for carrying out the Reasonable Assurance for BRSR Core and Limited
assurance for the remaining BRSR disclosures, in alignment with SEBI's requirements, for FY2026.

The Company has adopted a Policy for Responsible and Sustainable Business Conduct. The Board has in place
an executive level cross functional ESG Committee headed by the Managing Director. The Committee chalks
out plans and other initiatives keeping in view the leading practices and the requirements. It also monitors the
implementation of ESG related initiatives and reporting thereof.

The BRSR in the updated format (including KPIs of BRSR Core) prescribed by SEBI is annexed to the Annual
Report. A detailed ESG Report describing various initiatives, actions and process of the Company towards the
ESG endeavour can be accessed athttps://www.aboutbajajfinserv.com/impact-environmental-social-and-
governance.

Significant and Material Orders passed by the Regulators, Courts or Tribunals

There were no significant or material orders passed by the regulators, courts or tribunals having an impact on
the going concern status and Company's operations in future.

Conservation of Energy

The Company's operations are not energy intensive. However, it remains committed to responsible resource
utilisation and minimizing its environmental impact. Initiatives to reduce greenhouse gas emissions, energy
consumption, and water usage have been introduced across select areas of operations. Details of these
measures and their outcomes are provided in the Business Responsibility and Sustainability Report (BRSR) and
ESG Report.

Technology Absorption

The details pertaining to technology absorption have been explained in the Management Discussion
and Analysis.

Considering the nature of services and businesses, no specific amount of expenditure is earmarked for
Research and Development. However, the Company on an ongoing basis strives for various improvements in the
products, platforms, and processes.

Foreign Exchange Earnings and Outgo

During FY2026, the Company did not have any foreign exchange earnings and the foreign exchange outgo in
terms of actual outflow amounted to C 1,032.12 crore.

RBI Guidelines

The Company continues to fulfil all the norms and standards laid down by RBI pertaining to non-performing
assets, capital adequacy, statutory liquidity assets, etc. As against the RBI norm of 15%, the capital to risk-
weighted assets ratio of the Company was 21.55% as on 31 March 2026. In line with the RBI guidelines for
asset liability management ('ALM') system for NBFCs, the Company has an asset liability committee, which
meets monthly to review its ALM risks and opportunities. Further, the Company is well ahead of the regulatory
requirement in terms of liquidity coverage ratio ('LCR') introduced by the RBI in FY2020. As against the LCR
requirement of 100%, the Company's LCR as on 31 March 2026 was 128.38%.

The Company continues to be in compliance with the RBI Directions.

Corporate Governance

In terms of the SEBI Listing Regulations, a separate section titled Report on Corporate Governance has
been included in this Annual Report, along with the Management Discussion and Analysis and General
Shareholder Information.

The Managing Director and the Chief Financial Officer have certified to the Board in relation to the financial
statements and other matters as specified in the SEBI Listing Regulations.

A certificate from Secretarial Auditor of the Company regarding compliance of conditions of corporate
governance is annexed to this Report and it does not have any observations.

Secretarial Standards of ICSI

The Company has followed the applicable Secretarial Standards with respect to Meetings of the Board of
Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

Other Statutory Disclosures

• In this report, any reference to the statutory or regulatory guidelines, acts, circulars, regulations,
notifications and directions, unless the context otherwise requires, is construed to include any amendments,
modifications, updations or re-enactment thereof as the case may be.

• The financial statements of the Company and its subsidiaries are placed on the Company's website at
https://www.aboutbajajfinserv.com/finance-investor-relations-annual-reports.

• More details regarding the operations, state of affairs and initiatives of the Company are given in the
Management Discussion and Analysis.

• Details required under the provisions of section 197(12) of the Act read with rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, inter alia,
the ratio of remuneration of director to median remuneration of employees, percentage increase in the
median remuneration, are annexed to this Report.

• Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as
prescribed under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, as amended, containing details prescribed under rule 5(3) of the said rules, which form part of
the Directors' Report, will be made available to members on request, as per provisions of section 136(1) of
the Act.

• The Company being an NBFC, the provisions relating to chapter V of the Act, i.e., acceptance of deposit,
are not applicable. Hence, information pursuant to rule 8 of the Companies (Accounts) Rule, 2014 is not
applicable. However, disclosures as per RBI regulations with respect to deposits have been made in this
Annual Report.

• The provisions of section 148 of the Act relating to maintenance of cost records and cost audit are not
applicable to the Company.

• Details pursuant to rule 13(4) Companies (Audit and Auditors) Rules, 2014 are provided under para 'Fraud
Monitoring and Reporting' of this report.

• The Company remains committed to supporting working mothers and promoting a gender-inclusive
workplace. The Company has complied with the applicable provisions of the Maternity Benefit Act, 1961.

• There is no change in the nature of business of the Company during FY2026.

• The Company has not defaulted in repayment of loans from banks and financial institutions. There were no
delays or defaults in payment of interest/principal of any of its debt securities.

• As on 31 March 2026, the Company had 68,742 permanent employees, comprising 64,444 male and
4,298 female employees.

• Disclosures under section 197(14) of Companies Act, 2013:

• Rajeev Jain, Vice Chairman & Managing Director (DIN: 01550158)

Rajeev Jain is on the Board of BHFL, a subsidiary of the Company, as its Non-executive Vice Chairman.

In his capacity as a Non-executive director, he draws sitting fees and commission from BHFL at par with
other Non-executive directors in terms of its remuneration policy. The total remuneration (sitting fees and
commission) drawn for FY2026 is C 92 lakh. Apart from the above, he does not draw any commission from
any other subsidiary company.

Effective 1 April 2025, he has been appointed on the Board of Bajaj Finserv Ltd. ('BFS'), the holding
company, as a Non-executive, Non-independent director. He is entitled to sitting fees and commission
on par with other Non-executive, Non-independent directors. The total remuneration (sitting fees and
commission) drawn for FY2026 is C 20 lakh.

• Neither any application has been made, nor any proceeding is pending against the Company under
the Insolvency and Bankruptcy Code, 2016 ("Code"). However, the Company has been impleaded as a
respondent in certain applications filed by corporate borrowers under the Code, wherein such borrowers have
sought reliefs on account of their inability to repay loans availed from the Company. Further, these matters
do not have any material adverse impact on the business, operations, or financial position of the Company.

• During FY2026, there was no instance of one-time settlement with Banks or Financial Institutions. Therefore,
as per rule 8(5) (xii) of Companies (Accounts) Rules, 2014, reasons of difference in the valuation at the time
of one-time settlement and valuation done while taking loan from the Banks or Financial Institutions are

not reported.

• The voting rights are exercised directly by the employees in respect of shares allotted under the Employee
Stock Option Scheme of the Company. Thus, the disclosure requirements pursuant to rule 16(4) of the
Companies (Share Capital and Debentures) Rules, 2014, is not applicable.

• Disclosure pursuant to RBI Master Directions, unless provided in the Directors' Report, form part of the notes
to the standalone financial statements and Report on Corporate Governance.

• The Company has in place various Board approved policies pursuant to Companies Act, 2013, SEBI
Regulations, RBI Directions, and other regulations. These policies are reviewed from time to time keeping in
view the operational requirements and the extant regulations. The Report on Corporate governance contains
web-link for policies hosted on website.

Directors' Responsibility Statement

In accordance with the provisions of section 134(3) (c) of the Act and based on the information provided by the

Management, the Directors state that:

i. in the preparation of the annual accounts, the applicable Accounting Standards have been followed along
with proper explanation relating to material departures where applicable;

ii. they have selected such accounting policies and applied them consistently and made judgements and
estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company for FY2026;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company
and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal
financial controls are adequate and are operating effectively; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that
such systems are adequate and are operating effectively.

Acknowledgement

The Board of Directors places its gratitude and appreciation for the support and cooperation from its members,
debenture holders, trustees for debenture holders, the Reserve Bank of India, the Insurance Regulatory and
Development Authority of India, the Securities and Exchange Board of India, BSE Limited & National Stock
Exchange of India Limited, the Registrar to an issue and Share Transfer Agent, the depositories, banks, financial
institutions, and customers.

The Board of Directors also places on record its sincere appreciation for the commitment and hard work put in
by the Management and the employees of the Company, its subsidiaries and associates and thanks them for yet
another good year of performance.

On behalf of the Board of Directors,

Sanjiv Bajaj

Chairman

DIN: 00014615
Pune: 29 April 2026