The Reserve Bank of India (RBI) on Wednesday, November 15, ordered Bajaj Finance to put a halt to sanctioning and disbursing loans through two of its online lending products named eCOM and Insta EMI Card with an immediate effect. The RBI directive came after the company failed to adhere to the extant provisions of digital lending guidelines. RBI highlighted that the company did not issue key fact statements to borrowers for the lending products. There were also deficiencies concerning other digital loans sanctioned by the company, the RBI said.
These supervisory restrictions will be reviewed after the rectification of said deficiencies to the satisfaction of the RBI, the central bank added. In August 2022, the RBI unveiled a set of regulations aimed at overseeing digital lending. This initiative seeks to safeguard borrowers and curb the escalating instances of fraud and illicit activities prevalent in the sector.
"The Reserve Bank of India has today, in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, has directed Bajaj Finance Ltd. to stop sanction and disbursal of loans under its two lending products 'eCOM' and 'Insta EMI Card', with immediate effect," the central bank said in a statement.
"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 RBI said, highlighting the reason behind barring the service.
The Insta EMI Card (also known as EMI Network Card) is a financing solution by the company that allows users to shop through online channels and purchase from an option of more than 1 million products at no cost EMI. Customers also get a pre-approved loan limit of up to Rs. 2 lakh and flexible repayment tenure of up to 60 months.
At the moment, it appears that those who already own this card will not be able to get any EMI offers till further notice by RBI. It is unclear whether repayments will also be halted for this period.
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