On Wednesday, the Reserve Bank of India (RBI) instructed Bajaj Finance Ltd. to immediately cease the approval and disbursement of loans under its 'eCOM' and 'Insta EMI Card' lending products. This action was necessitated due to the company's non-compliance with the existing provisions of the RBI's digital lending guidelines, particularly the non-issuance of key fact statements to borrowers under these two lending products and deficiencies in the key fact statements issued for other digital loans sanctioned by the company, as stated by the RBI. These supervisory restrictions will be reviewed once the said deficiencies have been rectified to the satisfaction of the RBI.
According to RBI rules, a standardized key fact statement (KFS) must be provided for the borrower to proceed with the loan execution contract. The KFS, which is mandatory to be shared with customers, outlines details such as the annual percentage rate (APR), terms and conditions of recovery, look-up period, and grievance-related guidelines. A look-up period is offered to customers during which they can opt out by paying the principal and proportionate APR without any penalty. Any charge or fee not mentioned in the KFS cannot be levied on the borrower. In a statement, Bajaj Finance said, "We wish to submit that Key Fact Statement ('KFS') are being issued for the loans booked under the above-mentioned two lending products. However, based on the supervisory concerns raised by the RBI, we will undertake a detailed review of the KFS and implement requisite corrective actions to the satisfaction of the RBI at the earliest."
