Bajaj Fin asked to halt lending via 2 products
Bank of India (RBI) has barred Bajaj Finance Ltd from lending under its eCOM and Insta EMI Card products. “This action is necessitated due to non-adherence of the company to the extant provisions of digital lending guidelines of 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," the RBI said in a press release on Wednesday. The regulator said it will review the supervisory restrictions after the company rectifies deficiencies to the RBI’s satisfaction.
According to the RBI’s digital lending guidelines released last year, a lender must issue a ‘key fact statement’ to the borrower at the time of giving a loan. This would have details of the annualised rate charged to the borrower of a digital loan, the recovery mechanism, and details of the grievance redressal officer among other things. Bajaj Finance’s Insta EMI card allows customers to shop at zero-cost EMIs.
With this EMI card, customers get a pre-approved loan limit of up to ₹2 lakh that can be used at 150,000 online and offline partner stores across 4,000 cities. There are 42 million EMI cards in force currently, according to its investor presentation for the quarter ended September, higher 22% year-on-year. In the second quarter, it acquired over 4.2 million EMI cards through the digital channel.
Bajaj Finance added 3.58 million new customers during the second quarter, with 8% of this new customer addition coming from the EMI card, according to the presentation. “The Insta EMI card was the first kind of ‘buy now pay later (BNPL)’ card issued by any non banking financial company. The
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