In a rather surprising move, RBI instructs Bajaj Finance to stop granting instant loan approvals and release of funds for customers’ purchases made via eCOM and Insta EMI Card offerings, effective immediately. This comes up as a result of Bajaj Finance’s failure to adhere to the relevant provisions indicated under Digital Lending guidelines of the RBI.
The central bank particularly highlighted the lack of KFS to the borrowers under these two lending products as well as some deficiency issues KFS linked to other computer generated loans approved by the firm. The RBI will lift the control only after these areas are corrected satisfactorily by it.
In answer of the RBI’s order, Bajaj Finance made a declaration affirming the issues in question. The company asserts it will quickly look into KFS and correct them in response to supervisory input. Just as advised by the RBI, Bajaj Finance is swiftly suspending approvals for new loans on it’s eCOM platform and Insta EMI card.
The RBI introduced stringent norms last August which are meant to protect borrowers and curb shoddy lenders in the digital space. This was the final outcome of efforts that started towards mid January 2021 when Reserve Bank of India appointed a committee which deliberated on issues relating to this particular segment in the Indian financial industry.
Despite the regulatory environment tightening up, Bajaj Finance reassures that it will quickly respond to the RBI’s issues and continue providing its clients with appropriate financial service. The growing issue of compliance is an indication that more efforts are being taken by lenders to ensure fairness within the digital lending platform.
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