Reserve Bank of India ordered Bajaj Finance to stop sanction and disbursal of loans under its two lending products eCOM and Insta EMI Card, 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 central bank said in a statement.
The central bank said that supervisory restrictions will be reviewed after the rectification of the said deficiencies.
Bajaj Finance is a non-banking finance company (NBFC) which can take deposits and lend. From retail to small and medium enterprise, the bank's business spans several segments as an investment and credit grade NBFC.
Bajaj Finance is one of the biggest NBFC in the country, with the Q2 net profit coming in at Rs 3,500 crore, an increase of 28 per cent as compared to the same period last year.
RBI's latest action has come after it issued guidelines in August year to curb wrongful activities in digital lending to protect consumers. NBFCs such as Bajaj Finance are required to adhere to them.
Following the central bank's order, Bajaj Finance reassured investors in a regulatory filing that the decision will not impact the financials of the company. Its shares had closed at 1.95 per cent down at Rs 7,216.95 in the last trading session.