The Reserve Bank of India (RBI) has restricted some of Bajaj Finance digital lending products due to failure of regulatory compliance issued by the central bank of India (RBI). RBI has directed Bajaj Finance to stop disbursing loans through two of its lending products – “eCOM” and “Insta EMI Card” – with immediate effect, as per an official press release issued on15th November 2023.

The order has been issued due to “non-adherence” to the extant provisions of RBI’s digital lending guidelines, the statement noted.

In this regard RBI issued a press release dated 15th November 2023:

15th November 2023

Action against Bajaj Finance Ltd. under Section 45L(1)(b) of the Reserve Bank of India Act, 1934

The Reserve Bank of India has today, in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, has directed Bajaj Finance Ltd. (“the company”) to stop sanction and disbursal of loans under its two lending products ‘eCOM’ and ‘Insta EMI Card’, with immediate effect.

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. These supervisory restrictions will be reviewed upon the rectification of the said deficiencies to the satisfaction of RBI.

What is section 45L(1)(b) ?

Section 45L Power of Bank to call for information from financial institutions and to give directions.

(1) If the Bank is satisfied for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do, it may–
(a) require financial institutions either generally or any group of financial institutions or financial institution in particular, to furnish to the Bank in such form, at such intervals and within such time, such statements, information or particulars relating to the business of such financial institutions or institution, as may be specified by the Bank by general or special order;
(b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution.

What is the Bajaj Insta EMI Card ?

The Bajaj Finserv Insta EMI Card is a financing solution that allows you to shop for 1 million+ products on No Cost EMIS. With the Insta EMI Card, you get a pre-approved loan limit of up to Rs. 2 lakh that you can use at 1.5 lakh online and offline partner stores across 4,000+ cities. You also get to choose a flexible repayment tenure of up to 24 months for your purchase. [ Source: Bajaj Finance Website]

So before taking any loans from Bajaj Finance temporary put halt on that until RBI clarifies that the above digital lending product will continue.