Bajaj Finance barred from giving loans under 2 schemes; which are they?
Action necessitated due to non-adherence to extant provisions of digital lending guidelines, says RBI
The Reserve Bank on Wednesday (November 15) directed Bajaj Finance to stop the sanction and disbursal of loans under two lending products with immediate effect.
"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 RBI said in a statement.
These supervisory restrictions will be reviewed after the rectification of the said deficiencies to the satisfaction of the RBI, it added.
The two lending products mentioned by the RBI are eCOM and Insta EMI Card.
RBI norms
The restriction imposed on the two will be “reviewed upon the rectification of the said deficiencies to the satisfaction of RBI", said the RBI. The central bank had, in August 2022, released digital lending guidelines in order to rein in fraud and unlawful activities in the segment. These are meant to protect borrowers, and require compliance by banks and NBFCs.
Responding to the RBI action, Bajaj Finance said it will not have any material financial impact on the company. Media reports, quoting analysts, said the issue is likely to be resolved in a quarter or two, though there might be some immediate pressure on the Bajaj Finance share price.
Brokerage firm CLSA called it an operational breach rather than a significant violation of RBI norms. It has maintained its "buy" recommendation on the stock.
Jefferies, also a brokerage firm, sees limited financial impact. The Insta EMI Card base of 4 million is just 5 per cent of the total clients, it said, adding that it will likely account for just 0.2 per cent of the total disbursals. Jefferies also has a "buy" recommendation on the scrip.
