Four Financial Firms Hit by RBI Loan Ban

18 Oct 2024 , 12:10 PM

The Reserve Bank of India (RBI) has barred four finance companies, including Sachin Bansal-led Navi Finserv and Mitsubishi UFJ Financial Group-backed DMI Finance, from authorising and disbursing new loans after they were found to be charging excessive interest rates. This follows the RBI governor’s warning earlier this month against such activities.

The other two organisations are Asirvad Micro Finance Ltd, which is marketed by Manappuram Finance, and Arohan Financial Services Ltd, an MFI situated in Kolkata. The RBI’s instruction takes effect at the close of business on October 21, the central bank said in a statement on Thursday.

“Unfair and usurious practices continued to be seen during the course of onsite examinations as well as from the data collected and analysed offsite,” the central bank reported. The decision comes less than ten days after central bank governor Shaktikanta Das advised some NBFCs, MFCs, and HFCs against “aggressively pursuing growth without building up sustainable business practices.”

On October 9, while explaining the RBI’s monetary policy statement, he expressed worry about some financing institutions charging usurious rates, unreasonable processing fees, and spurious penalties in their drive of “growth at any cost”. He also stated that the RBI will “not hesitate to take appropriate action, if necessary,” but that “self-correction by NBFCs would be the preferred option.”

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