RBI removes restrictions on Sachin Bansal's lending firm Navi Finserv

The Reserve Bank of India (RBI) lifted restrictions on Sachin Bansal's Navi Finserv on December 2, 2024.

The decision comes less than two months after the central bank banned Navi from loan sanctioning and disbursement processes, effective October 21, 2024.

Navi wasn't not the only entity affected. The RBI took similar action against three other non-banking financial companies (NBFCs): DMI Finance, Asirvad Micro Finance, and Arohan Financial Services.

The directive was based on concerns over usurious lending practices, including high interest rates, unfair and hidden charges, and the evergreening of loans.

What did RBI say?

The RBI lifted restrictions after Navi Finserv revamped its practices and processes to comply with regulatory guidelines.

According to media reports, Navi Finserv's ambitious loan disbursement targets and aggressive sales strategies contributed to the violations. Many complaints revolved around high interest rates and unclear terms on compounding interest. 

"RBI had several rounds of interaction with the company for rectification of deficiencies. Now, having satisfied itself based on company’s submissions, and in view of 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 afore-mentioned restrictions placed on Navi Finserv Limited, with immediate effect," RBI said in a release.

“We are grateful to RBI for all their guidance and support throughout this process. 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," said Sachin Bansal, who has a 98% controlling stake in the lending firm.