Team Blitz India
MUMBAI: The Reserve Bank of India (RBI) has ordered Bajaj Finance to stop sanction and disbursal of loans under two lending schemes with immediate effect, due to deficiencies in adhering to digital lending guidelines.
The company has been asked to stop sanction and disbursal of loans under its two lending schemes ‘eCOM’ and ‘Insta EMI Card’ because of non-disclosure of key information to borrowers. Both schemes offer small ticket consumer finance.
The Insta EMI card offers consumers pre-approved credit of up to Rs 2 lakh for small ticket purchases, according to Bajaj Finance. The restrictions will be reviewed after the company rectifies the deficiencies, RBI said in a statement.
RBI’s digital lending guidelines, enforced last year, require that a lender disclose all fees and charges to borrowers upfront and detail its recovery practices in the event of a default.
The guidelines were introduced after complaints of unfair digital lending practices, including inadequate information on charges associated with digital loans.
RBI said it took the action by exercising its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934. “This action is necessitated due to nonadherence 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. These supervisory restrictions will be reviewed upon the rectification of the said deficiencies to the satisfaction of RBI,” said the central bank in a statement.
The NBFC had total assets under management of Rs 2.14 lakh crore as of September 30, according to an investor presentation. It had 41.9 million EMI cards outstanding, the presentation stated.
