On Friday, Bajaj Finance Ltd temporarily halted the issuance of EMI cards to new customers in response to the recent directive from the Reserve Bank of India (RBI). The RBI, on Wednesday, instructed Bajaj Finance to immediately cease the approval and disbursement of loans for its eCOM and Insta EMI Card products. This action was taken due to the company's failure to comply with the existing provisions outlined in the digital lending guidelines.
However, Bajaj Finance clarified that it has temporarily stopped giving Existing Member Identification cards (EMI cards) to new customers until it addresses the concerns raised by RBI while it is still providing financing to both new and existing customers at stores. The company stated that this move, along with previous actions announced on November 15, 2023, will not significantly affect its finances, as per the information shared in a stock exchange filing.
The Reserve Bank of India explained that they took this action because Bajaj Finance did not follow the rules outlined in the Digital lending guidelines. Specifically, the company did not provide Key Fact Statements to borrowers for these two lending products, and there were issues with the statements issued for other digital loans.
The RBI stated that these supervisory restrictions will be lifted once the company addresses and fixes these problems to the satisfaction of the RBI. In August of the previous year, the RBI introduced guidelines on digital lending to safeguard the interests of borrowers. These guidelines focus on the digital lending practices of RBI Regulated Entities (REs) and the lending service providers (LSPs) that they employ to offer various permissible credit facilitation services.
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