RBI Imposes Sanctions on Bajaj Finance: Halts Loans Under eCOM and Insta EMI Card

In a significant move, the Reserve Bank of India (RBI) has imposed restrictions on Bajaj Finance Limited, preventing the sanctioning and disbursing of loans under its two prominent lending products—eCOM and Insta EMI Card. The apex bank's decision stems from the non-compliance of the company with digital lending guidelines associated with these specific products.

According to an official statement from the RBI, the "supervisory restrictions" will remain in place until the non-banking financial company (NBFC) rectifies the identified violations. The central bank emphasized that a thorough review will be conducted once the company addresses and rectifies the identified deficiencies to the satisfaction of the RBI.

The specific violation highlighted by the RBI pertains to the company's failure to issue key fact statements to borrowers availing themselves of loans under the eCOM and Insta EMI Card lending products. This non-compliance prompted the RBI to exercise its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934.

The RBI's official statement reads, "This action is 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 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."

Bajaj Finance Ltd. is now required to cease the sanctioning and disbursal of loans under eCOM and Insta EMI Card with immediate effect. The company is expected to address the identified issues promptly to lift the supervisory restrictions and resume its lending activities under these products.

The RBI's intervention underscores the importance of adherence to digital lending guidelines and the need for financial institutions to ensure transparency and compliance in their lending practices. This development will likely prompt a comprehensive review of digital lending processes across the industry, emphasizing the significance of regulatory compliance in the rapidly evolving digital financial landscape.