The Reserve Bank of India (RBI) has taken significant action against four non-banking financial companies (NBFCs) and microfinance institutions (MFIs). Effective October 21, 2024, the RBI has decided to impose a ban on loan approvals and disbursements for these NBFCs.

The Reserve Bank of India has banned four finance companies, including Navi Finserv and DMI Finance, from issuing new loans due to excessive interest rates. This follows warnings about aggressive growth practices.

These business restrictions aim to address several supervisory concerns observed during inspections and data analysis.

The Reserve Bank of India (RBI) on Thursday took action against four NBFCs -- Asirvad Micro Finance Ltd, Arohan Financial Services Ltd, DMI Finance and Navi Finserv -- citing material

The Reserve Bank on Thursday ordered Sachin Bansal's Navi Finserv and three other NBFCs to cease and desist from sanction and disbursal of loans effective from the close of business of October 21, on material supervisory concerns,

The RBI has barred four NBFCs, including Navi Finserv and Asirvad MFI, from issuing loans due to excessive lending rates, non-compliance with income assessment norms, and other regulatory breaches.

According to the RBI, in addition to charging excessively high prices, these NBFCs were found to be not following regulatory guidelines on evaluating household income and factoring in current or future monthly repayment responsibilities for their microfinance loans.

Besides Navi Finserv, others who have been barred by the RBI include Asirvad Micro Finance, Arohan Financial Services and DMI Finance Private.

The non-banks lenders include former Flipkart founder Sachin Bansal-led Navi Finserv, DMI Finance, Asirvad Micro Finance and Arohan Financial Services. The banking regulator says 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,