After Bank Of Baroda, Bajaj Finance Becomes The Latest Lender To Face RBI Ban

More than a month after the Reserve Bank of India banned Bank of Baroda from onboarding new customers onto its 'bob World' mobile app, the RBI has taken another big step against another big lender.

Vanya GautamUpdated: Nov 16, 2023, 12:40 IST
3 min read
After Bank Of Baroda, RBI Bans Bajaj Finance From Giving Out Some Loans
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More than a month after the Reserve Bank of India banned Bank of Baroda from onboarding new customers onto its 'bob World' mobile app, the RBI has taken another big step against another big lender.

What Has The RBI Announced?

Are Banknotes With Star Symbol (*) Legal? Reserve Bank Of India Clarifies Amid Rising Confusion bqprime

The RBI has now banned Bajaj Finance, one of the country's largest consumer financiers, from sanctioning and advancing loans under two of its lending products-'eCOM' and 'Insta EMI Card'-immediately due to what the regulator described as 'non-adherence' with existing digital-loan guidelines.

"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 on Wednesday, as per the ET report.

This action will be reviewed after Bajaj Finance has rectified the deficiencies to the satisfaction of the RBI, the central bank said.

Despite the ban, Bajaj Finance shares are yet to react negatively and are marginally up today, trading around the Rs 7,284 mark. Bajaj Finance has a market cap of more than Rs 4 trillion and is a subsidiary of Bajaj Finserv.

How Has Bajaj Finance Reacted To The Ban?

Despite the ban, Bajaj Finance shares are yet to react negatively, and are marginally up today, trading around the Rs 7,284 mark. Bajaj Finance has a market cap of more than Rs 4 trillion, and is the subsidiary of Baja Finserv. fortune

In a statement following the central bank action, Bajaj Finance said it will review the Key Fact Statement ('KFS') for the loans booked under the two lending products based on the concerns raised by the RBI and implement the requisite corrective actions.

"We do not expect this action to have a material financial impact on the company. We re-affirm our commitment to rectify observations of the RBI in Key Fact Statement and comply with RBI directions at the soonest," Bajaj Finance said.

Wednesday's RBI's action is the latest in a series of several such recent regulatory moves in the lending industry.

When Did RBI Ban Bank Of Baroda?

bank of baroda mint

Last month, the RBI banned one of India's largest public sector banks, the Bank of Baroda (BoB), from onboarding any new customers onto its 'bob World' mobile application three months after a news network said the bank linked bank accounts to unregistered mobile numbers and signed them up to the application. Click here to know more.

Also Read: Inside America's Smallest Bank That Has No ATM, No Fees & No Wesbite

Which Other Banks Have Faced Bans From The RBI?

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Besides Bajaj Finance and Bank of Baroda, some other lenders have faced bans from the RBI in recent years. Earlier in December 2020, the RBI banned HDFC Bank from issuing new cards and introducing digital products after multiple systemic glitches were reported in the preceding two years. The ban was lifted in August 2021, as per the ET report.

Mastercard, Diners Club, American Express, and PayTm Payments Bank have also faced regulatory scrutiny for non-compliance or systemic glitches.

Also Read: Throwback: When George Soros Broke The Bank Of England In 1992

For the latest and more interesting financial news, keep reading Indiatimes Worth. Click here.

22/11/2024 8:52:49
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