RBI orders Bajaj Finance to stop lending under two products
On November 15, the Reserve Bank of India (RBI) directed Bajaj Finance to halt the approval and distribution of loans under its 'eCOM' and 'Insta EMI Card' offerings, as stated in an official announcement. The central bank pointed to the company's failure to adhere to its digital lending regulations, specifically the lack of Key Fact Statements provided to borrowers for these two loan products and shortcomings in the Key Fact Statements issued for other digital loans granted by the firm.
Supervisory restrictions to be reviewed upon rectification
The supervisory restrictions have been imposed by the RBI under section 45L(1)(b) of the Reserve Bank of India Act, 1934. The central bank noted that these limitations will be reconsidered once the identified issues have been resolved to its satisfaction. In August 2022, the RBI published a set of rules aimed at regulating digital lending in order to protect borrowers and combat fraudulent and illegal activities within the industry.
Bajaj Finance has become a top NBFC in India
Bajaj Finance, based in Pune, has become one of the top Non-Banking Financial Companies (NBFCs). For the quarter ending September, the company recorded a net profit of Rs. 3,550.8 crore, a 28% increase from Rs. 2,781 crore during the same period in the previous year. Its net interest income for this quarter grew by 26.3% year-over-year to Rs. 8,845 crore.
Bajaj Finance stock closes 1.84% down
In response to the RBI's directive, Bajaj Finance's shares closed at Rs. 7,223.95 each on the Bombay Stock Exchange (BSE) on November 15, a 1.84% decline from the previous day's closing price. This order from the central bank is part of its ongoing efforts to oversee the digital lending sector, which has experienced significant growth, especially in the wake of the COVID-19 pandemic. This has raised concerns about consumer protection and the potential for fraud and harassment by recovery agents.
