16-Nov-2023
2 mins read
The Reserve Bank of India (RBI) has issued a directive to Bajaj Finance, instructing the non-banking financial company (NBFC) to cease disbursing loans through its ‘eCOM’ and ‘Insta EMI Card’ products. This decision made public on November 15, demands immediate compliance from Bajaj Finance.
Regulatory Action Under the RBI Act
This important decision is taken in accordance with section 45L(1)(b) of the Reserve Bank of India Act, 1934. As the main regulatory authority of the banking industry, the RBI has emphasised the urgent need for Bajaj Finance to comply with this directive promptly.
Non-Adherence to Digital Lending Norms
The RBI’s decision is rooted in Bajaj Finance’s failure to follow the digital lending guidelines established by the central bank. Specifically, the issues highlighted include the non-issuance of Key Fact Statements to borrowers for these two products, along with deficiencies in the statements provided for other digital loans.
Potential Review Upon Rectification
The RBI has stated that this restriction on the ‘eCOM’ and ‘Insta EMI Card’ products is subject to review. This review will occur once Bajaj Finance rectifies the noted deficiencies to the satisfaction of the RBI.
RBI’s Digital Lending Guidelines
In August of the previous year, the RBI introduced digital lending guidelines aimed at curbing fraudulent practices and illegal activities in the digital loan sector. These guidelines are designed to safeguard borrowers and require strict adherence by digital lending platforms, including banks and NBFCs.