RBI asks Bajaj Finance to stop lending under eCOM, Insta EMI card products

The Reserve Bank of India (RBI) on Wednesday (November 15) asked Bajaj Finance to stop sanction and disbursal of loans under its two lending products – eCOM and Insta EMI Card – with immediate effect due to the non-adherence of the company to the extant provisions of digital lending guidelines.

“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 said deficiencies to the satisfaction of the RBI, the central bank added.

“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,” the RBI said in the statement.

In August last year, the RBI issued guidelines on digital lending with an aim to protect the interest of borrowers. The regulatory framework is focused on the digital lending ecosystem of RBI Regulated Entities (REs) and lending service providers (LSPs) engaged by them to extend various permissible credit facilitation services.

Earlier in January 2021, the central bank constituted a working group on 'digital lending, including lending through online platforms and mobile apps (WGDL).

Pune-headquartered Bajaj Finance has reported a 28 per cent rise in its consolidated net profit to ₹3,551 crore for the second quarter ended September 30.

(With inputs from agencies)