The Reserve Bank of India (RBI) has imposed strict measures against four Non-Banking Financial Companies (NBFCs), including NBFC-MFIs, exercising its authority under Section 45L(1)(b) of the Reserve Bank of India Act, 1934.
The RBI has directed Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited, and Navi Finserv Limited to halt the sanctioning and disbursing of loans, effective at the close of business on October 21, 2024.
This action is part of the RBI’s ongoing commitment to uphold the stability and compliance within the financial sector.
The decision stems from significant supervisory concerns regarding the Pricing Policy of these companies, specifically their Weighted Average Lending Rate (WALR) and the Interest Spread applied to their cost of funds, which were deemed excessive and inconsistent with the regulations outlined in the Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022, dated March 14, 2022 (updated as of July 25, 2022).
However, these restrictions do not prevent the companies from servicing their existing customers or engaging in collection and recovery activities.