Bajaj Finance temporarily suspends issuance of EMI cards to new customers after RBI's action

Bajaj Finance Ltd on Friday temporarily suspended issuance of EMI cards to new customers after Reserve Bank of India's (RBI) recent action.

RBI on Wednesday directed Bajaj Finance to stop sanction and disbursal of loans under its two lending products, eCOM and Insta EMI Card, with immediate effect due to the non-adherence of the company to the extant provisions of digital lending guidelines.

However, the NBFC said it continues to offer financing to new and existing customers at dealer stores and that RBI's action won't have any material financial impact on it.

"The Company has temporarily suspended issuance of Existing Member Identification cards (‘EMI cards’) to new customers till such time that the deficiencies observed by RBI are rectified to their satisfaction. The Company continues to offer financing to new and existing customers at dealer stores in the normal course of business. We further wish to inform that the above action, together with the actions communicated in this regard on 15 November 2023, will not have a material financial impact on the Company," said Bajaj Finance in a stock exchange filing.

"This action is necessitated due to non-adherence of the company to the extant provisions of Digital lending guidelines of the 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," RBI had said in a statement.

These supervisory restrictions will be reviewed after the rectification of said deficiencies to the satisfaction of the RBI, the central bank added. In August last year, the Reserve Bank issued guidelines on digital lending with an aim to protect the interest of borrowers. The regulatory framework is focused on the digital lending ecosystem of RBI Regulated Entities (REs) and lending service providers (LSPs) engaged by them to extend various permissible credit facilitation services.

Earlier in January 2021, the central bank constituted a working group on 'digital lending, including lending through online platforms and mobile apps (WGDL). Pune-headquartered Bajaj Finance has reported a 28 per cent rise in its consolidated net profit to Rs 3,551 crore for the second quarter ended September 30.

"The Company is in the process of implementing requisite actions to make good the deficiencies at the earliest, and will continue to engage with RBI to ensure compliance on all parameters," Bajaj Finance said on Friday.