RBI directs Bajaj Finance to stop lending under two lending products
Mumbai: The Reserve Bank of India (RBI) on Wednesday directed Bajaj Finance to stop issuing loans under its two products eCOM and Insta EMI Card.
The direction follows non-adherence to the existing provisions of Digital lending guidelines of the Reserve Bank of India, especially non-issuance of Key Fact Statements to the borrowers under the two lending products.
Further, it also pertains to the insufficiencies in the Key Fact Statements given in relation to other digital loans issued by the company.
The central bank stated that these supervisory restrictions will be re-examined upon the correction of the deficiencies pointed out to the satisfaction of RBI.
On August 10, 2022, the RBI released a list of rules to regulate digital lending to safeguard borrowers and crack a whip on the burgeoning frauds and illegal activities within the lending business sector.
The central bank also established a working group in January 2021 this year to study the issues pertaining to the sector and provide suggestions on ways of controlling the digital lending sector.
In November 2021, the working group suggested more stringent norms to regulate digital lenders, with some already accepted by the RBI.
The regulations were long-awaited and expected by stakeholders and industry experts. The number of instant loan providers increased, particularly following the COVID-19 pandemic. These lenders attract unsuspecting consumers seeking convenient loans, only to subject them to harassment later through the use of recovery agents.
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