The NBFC will restart loan approval and disbursement for both segments, including EMI card issuance.
Bajaj Finance announced on Thursday that the Reserve Bank of India (RBI) has lifted restrictions on its lending products ‘eCOM’ and ‘Insta EMI Card’ with immediate effect, as per an exchange filing. According to the filing, the RBI conveyed its decision in a letter dated May 2, 2024, based on the remedial actions taken by the company.
Resumption of Loan Operations and Regulatory Action Timeline
The NBFC will recommence loan approval and disbursement across both business segments, including EMI card issuance.
The RBI had banned new loan approvals and disbursements for ‘eCOM’ and digital ‘Insta EMI Card’ due to violations of digital lending guidelines, including non-issuance of key fact statements (KFS) for these products and deficiencies in KFS for other digital loans.
Additionally, in a letter dated November 17, 2023, the NBFC notified the exchanges about the temporary halt in issuing Existing Member Identification cards (‘EMI cards’) to new customers.
On November 15, 2023, the NBFC notified stock exchanges of RBI’s restriction on approving and disbursing new loans for “eCOM” and online/digital transactions on ‘Insta EMI Card’.
Impact of Regulatory Measures on Bajaj Finance and Growth Projections
Nomura India observed a 4% impact on Bajaj Finance’s PBT in Q4 due to regulatory measures on its ‘eCOM’ and ‘Insta EMI Card’ products.
Bajaj Finance projects 26-28% AUM growth for FY25, slightly above its long-term guidance of 25-27%. However, Nomura anticipates lower RoE (21-23%) and PAT (23-24%) growth due to NIM pressure (down 30-40 bps from 4Q24 to 2Q25), increased cost of funds, and elevated credit cost (1.75-1.85% vs. 1.6% in FY24).
Disclaimer: SMT offers stock market news for informational purposes exclusively and should not be interpreted as investment counsel. Readers are urged to seek advice from a certified financial advisor before making any investment choices.
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