RBI Directs Bajaj Finance To Stop Giving Loans

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The Reserve Bank of India (RBI) is the central banking institution in India. It is responsible for issuing currency, managing monetary policy, and regulating the banking sector in the country. The RBI plays a crucial role in maintaining financial stability and economic growth in India. One of RBI’s key functions is formulating and implementing monetary policies. Through tools like repo rates, reverse repo rates, and open market operations, the RBI influences the money supply and interest rates, aiming to keep inflation within a target range. This, in turn, impacts the overall economic environment.

Reserve Bank of India on wednesday directed the Bajaj Finance to stop sanction and distribution of loans under its two lending product ‘eCOM’ and ‘Insta EMI Card’ with an immediate effect. ”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,” the Reserve Bank of India said in a press release.

The action is taken due to the non-adherence to digital lending guidelines of Reserve Bank of India said the banking regulator. Bajaj Finance is a non-banking financial company, with a customer base of 76.5 million. It has ₹2.9 lakh crore in assets under management (AUM) as of September 30, 2023. Its deposit book stood at ₹54,821 crore in the same period.

Recently the RBI tightens norms on personal loads for banks. Now, RBI Governor Shaktikanta Das had flagged the high growth in certain components of consumer credit and advised banks and Non-Banking Financial Companies (NBFCs) to strengthen their internal surveillance mechanisms, address the build-up of risks and institute suitable safeguards, in their own interest. The revised norms risk weights have been increased by 25% points will not be applicable for consumers loads, housing, education, and vehicle loads. These will not be applicable for gold and gold jewellery. It will continue to attract 100 percent risk weight.