The Reserve Bank of India (RBI) has stepped up to the plate, taking stringent action against four NBFCs, including NBFC-MFIs, under its authority. This decisive move not only highlights the RBI’s commitment to maintaining a robust financial system but also offers you peace of mind. By enforcing regulations under Section 45L(1)(b) of the Reserve Bank of India Act, 1934, the RBI ensures that your investments are safeguarded against unscrupulous practices.
The decisive action against Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited, and Navi Finserv Limited. Effective from the close of business on October 21, 2024, these institutions must cease all loan sanctions and disbursals. This directive aims to ensure consumer protection and financial stability in the market.
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The Reserve Bank of India (RBI) is actively implementing strategic measures designed to enhance the stability and compliance of our financial sector. By reinforcing regulations and ensuring adherence, the RBI aims to build a robust economic environment that fosters growth, security, and trust.
“This action is based on material supervisory concerns observed in the Pricing Policy of these companies in terms of their Weighted Average Lending Rate (WALR) and the Interest Spread charged over their cost of funds, which are found to be excessive and not in adherence with the regulations as laid down in the Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 dated March 14, 2022 (updated as on July 25, 2022) and Master Direction – Reserve Bank of India (Non-Banking Financial Company–Scale Based Regulation) Directions, 2023, dated October 19, 2023 (updated as on March 21, 2024). These are also found to be not in conformity with the provisions laid down under Fair Practices Code issued by the Reserve Bank, ” RBI said in a release.
The restrictions do not stop these companies from servicing their current customers or conducting collection and recovery activities.