RBI bans four finance companies from sanctioning and disbursing new loans
finance companies, including Sachin Bansal-led Navi Finserv and Mitsubishi UFJ Financial Group-backed DMI Finance, from sanctioning and disbursing new loans as they were found to be charging excessive interest rates. This follows a warning by the RBI governor earlier this month over such practices.
The other two companies are Manappuram Finance-promoted Asirvad Micro Finance Ltd and Kolkata-based MFI Arohan Financial Services Ltd. The RBI’s directive comes into effect from the close of business on October 21, the central bank said in a statement on Thursday.
“Unfair and usurious practices continued to be seen during the course of onsite examinations as well as from the data collected and analysed offsite,” the RBI said. The action comes less than 10 days after central bank governor Shaktikanta Das warned some non-banking finance companies (NBFCs), microfinance companies (MFCs) and housing finance companies (HFCs) against “aggressively pursuing growth without building up sustainable business practices.”
On October 9, while detailing the RBI's monetary policy statement, he flagged concerns about some finance companies charging usurious rates, unreasonably high processing fees and frivolous penalties in their pursuit of “growth at any cost”. He also stated that the RBI will “not hesitate to take appropriate action, if necessary”, adding that “self-correction by NBFCs, however, would be the desired option”.
ANavi Finserv spokesperson said, “The company is reviewing the directions received from RBI and will work with
