In a recent development, the Reserve Bank of India (RBI) has taken stringent action against Bajaj Finance Limited, restricting the non-banking financial company (NBFC) from sanctioning and disbursing loans under two of its lending products—eCOM and Insta EMI Card. The apex bank cited the company’s failure to comply with digital lending guidelines associated with these products.
According to a statement released by the RBI, the “supervisory restrictions” on Bajaj Finance will remain in effect until the NBFC addresses the violations and rectifies the deficiencies. The central bank emphasized that the review of these restrictions will be contingent upon the satisfactory resolution of the identified issues.
“The Reserve Bank of India has today, in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, has directed Bajaj Finance Ltd. (“the company”) to stop sanction and disbursal of loans under its two lending products ‘eCOM’ and ‘Insta EMI Card’, with immediate effect,” stated the RBI.
The regulatory intervention stems from Bajaj Finance’s non-compliance with digital lending guidelines, specifically its failure to issue Key Fact Statements to borrowers under the eCOM and Insta EMI Card products. The RBI highlighted deficiencies in the Key Fact Statements issued for other digital loans sanctioned by the company.
“The action is necessitated due to non-adherence of the company to the extant provisions of Digital lending guidelines of Reserve Bank of India, particularly non-issuance of Key Fact Statements to the borrowers under these two lending products and the deficiencies in the Key Fact Statements issued in respect of other digital loans sanctioned by the company,” the RBI explained.
The central bank invoked its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, to direct Bajaj Finance to cease loan operations under the specified products. The NBFC is now tasked with addressing the identified lapses and ensuring compliance with the digital lending guidelines outlined by the RBI.
As the financial industry closely observes this development, the impact on Bajaj Finance’s operations and the subsequent rectification measures will play a crucial role in the resolution of this regulatory intervention.
Sources By Agencies