How Bike Bazaar Ran Into A Credit Crisis

by · Inc42

SUMMARY

  • Bike Bazaar has effectively halted lending after its loan book deteriorated sharply, stopping fresh disbursements from December 2025
  • Years of rapid growth have reversed into a liquidity and credit crisis. The startup swung from a ₹3 Cr profit in FY25 to a ₹45 Cr loss in FY26, its loan book shrank 40%
  • Despite selling stressed loans, restructuring assets, and raising ₹10 Cr through NCDs, Bike Bazaar remains cash-strapped, with just ₹44 Cr on hand, and is reportedly in talks with a strategic investor to stay afloat
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Pune-based two-wheeler finance startup Bike Bazaar has stopped lending, halting all new disbursements beginning December 2025 owed to a sharp deterioration for its loan book. Credit ratings agency ICRA downgraded Bike Bazaar to BBB status last month, marking it as a high risk borrower.

It was done because more than a third of its portfolio is now either not paying or has already been sold off as distressed debt. As per an ICRA report, the startup is in talks with a “strategic investor” to revive its business, but given the current market, a revival seems a long way away. 

Notably, the deterioration has also begun spilling over into the securitisation process where Bike Bazaar-originated loans are pooled together and traded to other investors as an asset. 

Inc42 has reached out multiple times to Bike Bazaar cofounder and joint managing director Karunakaran Vadakkepat to get a better understanding of the situation and the company’s strategy to eliminate these risks. The story will be updated based on the company’s responses, but thus far, Bike Bazaar has not responded to our questions. 

Bike Bazaar’s Credit Hole

On June 25, 2026, Moody’s affiliated ICRA downgraded multiple pass-through certificate (PTC) issuances across five securitisation trusts with underlying loan pools originating through Bike Bazaar. The rating agency cited the weakening performance of the underlying loan pools and the deteriorating financial position of Bike Bazaar, which services these loans. 

ICRA also said borrowers have fallen behind on repayments, with monthly collection efficiency declining across the loan pools. The share of loans with even one missing payment climbed to between 6% and 17% in FY26. 

In two of the securitisation pools, 1.8% and 2.4% of loans have remained unpaid for more than 90 days, indicating a rise in bad loans.

Amid this, Bike Bazaar has already begun unwinding its corporate structure. As per RoC filings from February 2026, shareholders passed a special resolution to approve the transfer of up to 100% of its equity stake in subsidiary Bluebird Auto Trade Pvt Ltd to existing shareholders.

Notably, Bluebird was the marketplace arm of Bike Bazaar, from which it used to sell new and pre-owned two wheelers. 

Further, Bike Bazaar’s gross stressed assets, a combination of non-performing loans and security receipts held against loans already sold to asset reconstruction companies, climbed from 8% of the portfolio in March 2024 to 38.1% by March 2026, as per provisional data shared by ICRA.