The results of Bajaj Finance announced on 21 July were surely disappointing, but that was expected in the light of the COVID-19 conditions. However, the larger issue that concerned analysts and shareholders pertained to a particular reporting practice of Bajaj Finance. A large chunk of its term loans were bunched and converted into flexi-loans by the company.

Now, flexi-loans are nothing new. They allow customers to defer payments. Bajaj Finance had also charged a fee to these customers for this service. This product has been in existence and typically attracts a higher rate of interest and also a switch fee. It is more of the timing of this move that has raised eyebrows with respect to Bajaj Finance.

It needs to be remembered that Bajaj Finance reported a sharp reduction in customers under EMI moratorium. However, loans worth Rs.8600 crore have been moved to this flexi category, in some cases even where there was no stress. Such flexi loans are normally used to extend the duration of the loan and that has left analysts worried about the meaning.