Coming as a sigh of relief, the Reserve Bank of India (RBI) has lifted the restrictions on Bajaj Finance’s two products eCOM and online digital Insta EMI Card, with immediate effect.
With this development, the company would now resume sanction and disbursal of loans in the above two business segments including issuance of EMI cards.
| “Now, we wish to inform that the RBI, vide its letter dated 2 May 2024, based on the remedial actions taken by the company, has conveyed its decision of lifting the said restrictions on eCOM and online digital ‘Insta EMI Card’, with immediate effect,” the company said in a filing to the stock exchanges. |
What was the ban on Bajaj Finance Insta EMI card?
Bajaj Finance has Insta EMI card that offers consumers pre-approved credit up for small ticket purchases.
In November 2023, citing the violations of the digital lending guidelines, the RBI imposed restrictions on the issuance of new loans and EMI cards.
The central bank said that the Bajaj Finance failed to provide KFS for loans issued through eCOM and Insta EMI Card.
It also found issues with KFS documents provided for other digital loans offered by Bajaj Finance. These documents might have lacked complete or accurate information, potentially leaving borrowers confused about the terms of their loans.
The Digital Lending guidelines
According to the RBI’s digital lending guidelines, lenders are required to disclose all fees and charges to borrowers upfront and also detail its recovery practices in the event of a default.
In case of Bajaj Finance, the regulator said these details were not issued by Bajaj Finance for the two products.
| The guidelines says that the lenders should provide borrowers with KFS documents as these are crucial summarising essential loan details like interest rates, processing fees, repayment terms, and other charges. |
What after lifting the curbs on Bajaj Finance Insta EMI card?
Since the ban has been lifted, the company would now resume sanction and disbursal of loans in the above two business segments including issuance of EMI cards.
Bajaj Finance has said that it will remain committed to ensure adherence and compliance of regulatory guidelines.
It is to be noted that on April 25, Bajaj Finance had said it has made the required changes after the RBI imposed business restrictions on two lending products last year.
Following this, the company has requested the regulator to review the business restrictions.
From a customer perspective, you can resume applying for loans and use Insta EMI cards for online and offline purchases through Bajaj Finance’s network of partnered merchants.
Following the development, the Bajaj group company stock emerged as the biggest gainer a on the BSE, the stock rallied 7.54% to Rs 7,400 while on NSE, it climbed 7.51% to Rs 7,400.
The company’s market valuation climbed Rs 23,008.1 crore to Rs 4,49,205.63 crore.
