RBI Restriction Imposed on Bajaj Finance: Immediate Halt on Loans in Two Categories: India’s leading financial institution, Bajaj Finance, faces substantial setbacks due to non-compliance with the Reserve Bank of India’s digital loan regulations. An order from the RBI directs Bajaj Finance to cease offering any loans immediately under two product categories, indicating a regulatory warning against non-compliance. This directive came into effect on Wednesday.
Heavy Impact on Bajaj Finance’s Operations
Bajaj Finance, known as one of the largest Non-Banking Financial Companies (NBFCs) in India, has experienced a halt in lending under two loan products – eCOM and Insta EMI cards. The RBI’s order compels an instant cessation of lending under these categories due to Bajaj Finance’s failure to adhere to the digital loan guidelines set by the central bank. This regulatory move, issued by the Banking Regulatory Authority of India (RBI), came into force on Wednesday, significantly affecting the company’s lending operations.
Violation of Digital Loan Guidelines Leads to Restrictions
The Reserve Bank of India has clarified that the imposition of restrictions on Bajaj Finance is due to the company’s non-compliance with the guidelines for digital loan disbursements. The central bank highlighted the company’s failure to provide key facts statements to borrowers under these loan categories and mentioned deficiencies compared to other digital loans. The RBI emphasized that this action was unavoidable, given the breaches in compliance.
RBI’s Regulatory Procedure
As per the powers vested in the Reserve Bank of India under the Banking Regulation Act of 1934, the RBI has imposed these restrictions on Bajaj Finance. Following rectification of the identified deficiencies, the RBI will conduct a reassessment of the situation. Once the necessary corrections are made and the procedures are found satisfactory, the RBI may consider lifting the imposed restrictions, as stated by the central bank.
Fluctuating Shares of Bajaj Finance
After the announcement of the cessation of lending activities by Bajaj Finance, its shares experienced a significant downturn during the initial trading hours on Wednesday. However, later in the day, the shares witnessed a rebound. At midday, Bajaj Finance shares were trading at Rs. 1,15,82.75, displaying volatile market behavior.
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