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RBI has imposed a ban on the sanctioning and disbursal of loans by four Non-Banking Financial Companies (NBFCs).

Banking & Finance | Dated: 03 Nov 2024

The Reserve Bank of India (RBI) has imposed a ban on 4 Non-Banking Financial Companies (NBFCs), including 2 Microfinance Institutions (MFIs), from sanctioning and disbursing loans due to high interest rates charged to customers, effective from 21st October 2024.

🎯 Key Highlights:

  • - The entities affected by this order are Asirvad Micro Finance Limited (NBFC-MFI), Arohan Financial Services Limited (NBFC-MFI), Directional Moving Index (DMI) Finance Private Limited (NBFC), and Navi Finserv Limited (NBFC).

💡 Other Important Facts:

  • (i) The Reserve Bank of India (RBI) has taken this strict action under its authority provided by Section 45L(1)(b) of the Reserve Bank of India Act, 1934.
  • (ii) The decision is based on significant supervisory concerns about the pricing policies of these companies, particularly their Weighted Average Lending Rate (WALR) and the interest spread over their cost of funds, which have been deemed excessively high and not in line with RBI regulations.

📚 Test Your Knowledge:

Which regulatory authority recently imposed a ban on the loan disbursal activities of four NBFCs?

Correct Answer: RBI

🚀 Quick Recap:

About RBI

  • CEO : Shaktikanta Das
  • Headquarter : Mumbai