Fintech

Reserve Bank Halts Bajaj Finance’s ECOM and Insta EMI Card Loans Over Regulatory Non-Compliance

• ByStartupStory     |    November 16, 2023

Reserve Bank mandated Bajaj Finance to cease the sanction and disbursal of loans under its eCOM and Insta EMI Card products, effective immediately. The regulatory action stems from the company’s failure to comply with the existing provisions of the Digital lending guidelines set forth by the Reserve Bank of India.

The RBI stated, “This action is necessitated due to non-adherence of the company to the extant provisions of Digital lending guidelines of the 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 supervisory restrictions imposed on Bajaj Finance will be subject to review once the identified deficiencies are rectified to the satisfaction of the Reserve Bank, as mentioned in the central bank’s official statement.

The guidelines, introduced by the Reserve Bank in August of the preceding year, aimed to safeguard the interests of borrowers within the digital lending landscape. The regulatory framework primarily focuses on entities regulated by the RBI and lending service providers engaged by them to offer permissible credit facilitation services.

The central bank had previously formed a working group on ‘digital lending, including lending through online platforms and mobile apps’ in January 2021, emphasizing the evolving nature of digital financial services.

Bajaj Finance, headquartered in Pune, reported a noteworthy 28 percent surge in its consolidated net profit, reaching Rs 3,551 crore for the second quarter ended September 30. The unfolding developments underscore the increasing importance of adherence to digital lending guidelines as financial institutions navigate the digital terrain.

 

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