NEW DELHI: In a blow to Bajaj Finance, banking regulator Reserve Bank of India (RBI) has asked the company to stop sanction and disbursal of loans under its two lending products ‘eCOM’ and ‘Insta EMI Card’ with immediate effect.
The action was taken by the banking regulator due to non-adherence of the digital lending guidelines of RBI by the company. In a statement issued, the central bank said: “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 regulator said that the restrictions imposed on the company will be reviewed ‘upon the rectification of the said deficiencies to the satisfaction of RBI’. According to the digital lending guidelines of the RBI, all regulated entities disbursing loan through online platform or mobile app must provide a standardized Key Fact Statement (KFS) to the borrower before executing the loan contract.
The key fact statement contains details (in a prescribed format) such as loan amount, loan term, interest type (fixed or floating), rate of interest, fee payables etc. InstaEMI Card is a product which offers up to Rs 2 lakh loan under no-cost-EMIs for purchase of certain goods. The borrower can choose to pay back the loan in flexible EMIs extending up to 60 months.