Bajaj Finance falls following RBI directive to halt loans under two lending products

Bajaj Finance shares came under selling pressure on Thursday after the Reserve Bank of India (RBI) directed the company to cease the sanction and disbursal of loans under its two lending products, namely eCOM and Insta EMI Card, effective immediately. This action was taken due to Bajaj Finance's non-compliance with the existing provisions outlined in the digital lending guidelines.

Shares of Bajaj Finance dropped by as much as 4 per cent, reaching an intraday low of Rs 6,937, in contrast to the 0.11 per cent performance of the Sensex.

The RBI, in a statement, highlighted that the regulatory intervention was necessary due to the company's failure to adhere to the digital lending guidelines, specifically the non-issuance of Key Fact Statements to borrowers under the mentioned lending products and deficiencies in the statements for other digital loans sanctioned by the company.

The central bank clarified that these supervisory restrictions would be reevaluated once the identified deficiencies were rectified to its satisfaction.

In August of the previous year, the RBI had issued guidelines on digital lending to safeguard the interests of borrowers. The framework primarily targeted the digital lending ecosystem of RBI Regulated Entities (REs) and their associated lending service providers (LSPs) engaged in providing various permissible credit facilitation services.

Earlier in January 2021, the RBI formed a working group on 'digital lending, including lending through online platforms and mobile apps (WGDL).

Bajaj Finance, headquartered in Pune, reported a 28 per cent increase in its consolidated net profit, reaching Rs 3,551 crore for the second quarter ending September 30.

As of 9:52 am, Bajaj Finance shares were trading 0.95 per cent lower at Rs 7,155.