2 weeks Ago By Ishika Gupta
The Reserve Bank of India (RBI) announced in a press release that it has removed the lending restrictions imposed on Navi Finserv, a non-banking financial company (NBFC) promoted by former Flipkart chairman and CEO Sachin Bansal. RBI states that the decision follows Navi Finserv’s adoption of revamped systems and strict compliance with regulatory guidelines ensuring fairness in loan pricing. The company has satisfied the Central Bank by rectifying deficiencies after several rounds of interaction with Navi Finserv.
Navi Finserv CEO Sachin Bansal stated that the company is committed to ensuring compliance concerning fairness in loan pricing, among other measures going forward, the Mint reported . Reason behind the ban Earlier in October, the RBI barred four NBFCs, including Navi Finserv from issuing loans. The Central Bank triggered the ban after noting material supervisory concerns in these companies’ Pricing Policy related to their Weighted Average Lending Rate (WALR).
The Central Bank deemed the Interest Spread charged over their cost of funds excessive and found it to violate the regulations outlined in the microfinance loan directions and NBFC scale-based regulations. Besides this, the listed NBFCs failed to adhere to the regulatory guidelines on the assessment of household income and consideration of existing/proposed monthly repayment obligations for microfinance loans, among other deviations. The ban came after RBI Governor Shaktikanta Das’ earlier comments , where he called out NBFCs for charging exorbitant interest rates in addition to “unreasonably high processing fees and frivolous penalties”.
Later, he stated that NBFCs comprising microfinance institutions (MFIs) and housing finance companies (HFCs) were also “chasing excessive returns on their equity”. After the RBI’s regulatory curbs, Navi Finserv cancelled its planned bond sale, citing “no immediate need for external funding”. Background on Navi Finserv Established in 2018, by Flipkart co-founder Sachin Bansal and Ankit Agarwal, Navi Finserv is a NBFC offering home and personal loans.
In October this year, displaying success in the UPI ecosystem, Navi Finserv overtook CRED to become India’s fourth largest UPI player, Moneycontrol reported . Also Read: Support our journalism: For You.
