RBI stops Bajaj Finance from digital lending
15 Nov 2023
The Reserve Bank of India (RBI) has directed Bajaj Finance Ltd to stop sanction and disbursal of loans under its two lending products ‘eCOM’ and ‘Insta EMI Card’, with immediate effect.
RBI said the action has been 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 facts, including the deficiencies in these two digital lending products, in the Key Statements to the borrowers.
Bajaj Finance, one of the largest non-bank consumer lenders in the country, held Rs2,14.000 crore ($25.76 billion) in total assets under management while it had 41.9 million EMI cards outstanding.as of 30 September.
The digital lending guidelines prescribed by the central bank last year required lenders to provide borrowers with an upfront disclosure of all fees and charges, along with information about their recovery practices in the event of a default.
RBI issued the guidelines after receiving several complaints of unfair digital lending practices, including lack of adequate information regarding the costs associated with digital loans.
RBI said it would review these supervisory restrictions upon rectification of the deficiencies to its satisfaction.