The RBI said that its order on Navi Finserv, DMI Finance, Arohan Financial Services and Asirvad Micro Finance would come into effect from the close of business on October 21
The RBI’s action is in response to excessive interest rates and non-compliance with its regulations. The NBFCs were found to have pricing policies that violated RBI guidelines
The business freeze will remain until Navi Finserv and the other firms take corrective actions to the satisfaction of the RBI
The Reserve Bank of India (RBI) has directed Sachin Bansal’s Navi Finserv and three other non-banking financial companies (NBFCs) to immediately stop sanctioning and disbursing loans due to supervisory concerns.
Citing material supervisory concerns, the RBI said that its order on Navi Finserv, DMI Finance, Arohan Financial Services and Asirvad Micro Finance would come into effect from the close of business on October 21.
The RBI’s action is in response to excessive interest rates and non-compliance with its regulations. The NBFCs were found to have pricing policies that violated RBI guidelines.
“This action is based on material supervisory concerns observed in the Pricing Policy of these companies in terms of their Weighted Average Lending Rate (WALR) and the Interest Spread charged over their cost of funds, which are found to be excessive and not in adherence with the regulations…,” the central bank said in a statement.
Additionally, the NBFCs were flagged for discrepancies in assessing household incomes and ensuring appropriate loan repayment terms.
Other concerns included irregularities in loan classification, outsourcing financial services, and inadequate disclosure of interest rates and fees.
The RBI emphasised that the restrictions will not affect existing loan servicing or collections but aim to ensure regulatory compliance.
Notably, the business freeze will remain until Navi and the other firms take corrective actions to the satisfaction of the RBI.
Commenting on the update, a Navi Finserv spokesperson said that the company is reviewing the circular received from the RBI and “is committed to addressing all concerns raised by the regulator promptly and effectively, prioritising what’s right for its customers”.
“The company remains dedicated to maintaining the highest standards of compliance, transparency, and customer care in its operations,” the spokesperson added.
(The story will be updated soon)
