RBI Bars Some Of Bajaj Finance’s Digital Lending Products
The Reserve Bank of India barred Bajaj Finance Ltd. from lending under its “eCOM” and “Insta EMI Card” products.
“This 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 said in a statement on Wednesday.
The regulator said that it would review the supervisory restrictions after the company rectifies the deficiencies to the RBI's satisfaction.
According to a person with knowledge of the matter, who spoke on condition of anonymity, only these specific products have been barred owing to the deficiencies. However, a supervisory restriction does not rule out any future penalties against the company.
In a statement to the exchanges, Bajaj Finance said that it will temporarily suspend sanction and disbursal of new loans under its eCOM product. It will also suspend sanction and disbursal of new loans online and offline through the Insta EMI card.
"...based on the supervisory concerns raised by the RBI, we will undertake a detailed review of the KFS and implement requisite corrective actions to the satisfaction of the RBI at the earliest," Bajaj Finance said in the statement.
The RBI's digital lending guidelines, issued in September 2022, state that a lender must issue a standard key fact statement to borrowers for all digital lending products. This statement must contain details regarding the annual percentage rate, recovery mechanism, details of grievance redressal officer, etc., among other things.
Bajaj Finance has over 4 crore EMI cards in force, according to its investor presentation for the quarter-ended September, higher by 22% year-on-year. In the second quarter, it acquired over 40 lakh EMI cards through the digital channel.
These cards allow customers to purchase goods and services on no cost monthly instalments. With the card, customers can get up to Rs 2 lakh worth pre-approved limit, which can be used at offline and online stores.
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