RBI Lifts Ban On Bajaj Finance’s eCOM And Insta EMI Card

The Reserve Bank of India, on Thursday, lifted restrictions on Bajaj Finance Ltd.'s eCOM and online digital Insta EMI Card products with immediate effect, according to an exchange filing from the lender.

"Now, we wish to inform that the RBI, vide its letter dated May 2, 2024, based on the remedial actions taken by the Company, has conveyed its decision of lifting the said restrictions on eCOM and online digital ‘Insta EMI Card’, with immediate effect," it said.

With this, Bajaj Finance has resumed sanction and disbursal of loans under eCOM and Insta EMI Card and also the issuance of new cards.

According to the company's statement, the reversal of RBI's restrictions has happened based on the remedial actions taken by the company. However, it did not specify the nature of actions taken.

The development comes after the company formally submitted its request to RBI for review and removal of restrictions of these digital lending products, according to non-banking finance lender's analyst call for March quarter.

The RBI in November had barred the lender from lending under its two offerings due to non-adherence to the digital lending guidelines—non-issuance of key fact statements to borrowers and deficiencies in KFS issued with respect to other digital loans sanctioned by the company.

According to a investor presentation for the September quarter of previous fiscal, Bajaj Finance had over four crore EMI cards in force, which was 22% higher on a yearly basis. Over the same period, it also acquired over 40 lakh EMI cards through its digital channels.

After the restrictions, the lender saw some impact on its business as well. In January-March quarter, the new loans booked by the lender were at 7.8 million, up merely 4% year-on-year.

Even the consolidated profit before tax grew 20% on a yearly basis to Rs 5,105 crore in the quarter-ended March.

"The profit before tax for Q4 was lower by approximately 4% due to regulatory restrictions on sanction and disbursal of loans under ‘eCOM’ and ‘Insta EMI Card’," according to the investor presentation.

Rajeev Jain, managing director of Bajaj Finance, also said in a post-results analyst call that the loan book was down on account of restrictions placed by RBI on these products.