The Reserve Bank of India (RBI) on Monday lifted the restrictions on the sanction and disbursal of loans by Sachin Bansal’s Navi Finserv with immediate effect. The apex bank, on October 17, had prohibited Navi Finserv, Asirvad Micro Finance, Arohan Financial Services, and DMI Finance from sanctioning and disbursal loans.
The restrictions were 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.
RBI has decided to lift restrictions after several rounds of interaction with the company for rectification of deficiencies.
“Now, having satisfied itself based on the company’s submissions, and in view of the adoption of revamped processes, systems, and the company’s commitment to ensure adherence to the regulatory guidelines on an ongoing basis, especially for ensuring fairness in the loan pricing, the Reserve Bank has decided to lift the aforementioned restrictions placed on Navi Finserv Limited with immediate effect,” it said.
While the restrictions imposed on Navi Finserv have been lifted, the restrictions on the other three companies remain in effect.
These restrictions have been imposed following the warnings by RBI governor Shaktikanta Das, during the announcement of October’s monetary policy, to the NBFC sector against reckless growth, unfair business practices, and exorbitant interest rates charged by some lenders.
In a statement, Navi Finserv said that it has worked to address identified deficiencies, and revamp its processes and systems, to the satisfaction of the RBI.
“We are grateful to the Reserve Bank of India for all their guidance and support throughout this process,” said Sachin Bansal, CEO, Navi Finserv. “As we resume our business operations, we are committed to ensuring enduring compliance, especially with respect to fairness on loan pricing, and to maintain the highest standards of governance and operational excellence.”
As operations resume, the company remains committed to addressing customer needs effectively and driving financial inclusion with integrity, said the company.
Set up in 2018 by Sachin Bansal and Ankit Agarwal, Navi Finserv operates as an RBI-registered NBFC in the middle layer category, offering personal and home loans. The company has emerged as a major player in the UPI ecosystem, surpassing CRED to become the fourth-largest UPI player by volume in October.