RBI Removes Restrictions on Digital Lending for Bajaj Finance

Bajaj Finance Limited is an Indian non-banking financial company headquartered in Pune. It is one of the leading Non-Banking Financial Companies in the country, It is a subsidiary of Bajaj Finserv engaged in lending and accepting deposits. The company has a customer base of around 83.7 million and holds assets under management worth more than Rs.3,30,000 crore. On Thursday in a regulatory filing, Bajaj Finance said that the Reserve Bank of India(RBI) has removed restrictions on Digital Lending on Bajaj Finance. 

Why did the RBI place restrictions previously?

Last year The Reserve Bank of India asked Non-Banking Financial Companies to stop digital lending transactions due to failure to comply with the Reserve Bank’s digital lending guidelines- specifically due to lack of transparency and disclosure of conditions which are required in case of digital loans like fees, charges and recovery practices in a key fact statement.

The restrictions were placed on the issuance of loans through the ‘eCOM’ and ‘Insta EMI Card’. The ‘eCOM’ card allows its user to enable online purchases on E-commerce platforms like Flipkart and Amazon through loans. While the EMI card allows customers to shop with a flexible repayment tenure for purchasing consumer goods and electronics. This Insta EMI card is accepted at more than 1.5 Lakh stores in the country across 4,000 Large and small cities.

What has the company said in its regulatory filing?

The Company in its regulatory filing on Thursday, has said that the RBI has conveyed its decision of lifting the imposed restrictions on eCOM and online digital Insta EMI Card with an immediate effect. The company further added that they are going to resume the sanction and disbursal of loans in the above two business segments and also include the issuance of EMI cards.

Market Reaction on this news:

The Markets have reacted positively to this removal of restriction by RBI on the cards of  Bajaj Finance, The stock of Bajaj Finance is up by 7% from its previous day’s closing and is currently trading at Rs.7359 a piece, The stock is up by 17% in the last one year. It made a 52-week high of Rs.8192.00 on October 6, 2023.

Check: Bajaj Group Stocks

Conclusion: The regulators in India such as the RBI have now become ruthless when it comes to disclosures and compliances. They want to maintain transparency, stability and integrity in the system to protect the interest of depositors. This removal of restrictions on Bajaj Finance has ensured their investors that they follow the regulations of RBI and are abided by them.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.