The Reserve Bank of India (RBI) issued a directive to Bajaj Finance Ltd on Wednesday, November 15, instructing the immediate cessation of loan sanction and disbursal under its two lending products, ‘eCOM’ and ‘Insta EMI Card’. This stringent action was taken due to the company’s failure to adhere to the existing provisions of digital lending guidelines, as stated by the RBI.
In an official statement, the RBI cited its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, emphasizing the necessity to cease the sanction and disbursement of loans under the mentioned products. The primary reasons for this action revolved around the company’s failure to provide key fact statements to borrowers under these two lending products. Additionally, deficiencies were identified in the key fact statements issued for other digital loans sanctioned by Bajaj Finance.
The RBI highlighted the gravity of non-compliance with the digital lending guidelines, underscoring the importance of ensuring complete adherence to regulatory norms. It further stated that these supervisory restrictions on Bajaj Finance will remain in place until the rectification of the identified deficiencies to the satisfaction of the RBI.
The decision taken by the RBI showcases its commitment to upholding regulatory standards in the digital lending sector, emphasizing the need for financial institutions to meticulously adhere to the stipulated guidelines. This move will likely prompt heightened scrutiny and necessitate swift corrective actions from Bajaj Finance to resume normal operations and regain regulatory compliance.
The Reserve Bank of India has been stringent in its oversight of financial institutions, reinforcing the importance of compliance with regulatory frameworks, particularly in the burgeoning digital lending landscape.
This development emphasizes the criticality for financial entities to adhere strictly to regulations, fostering a transparent and ethical lending environment, as prescribed by the regulatory authorities.
