RBI Removes Restrictions On Bajaj Finance's 'eCOM' And 'Insta EMI Card'

With the lift of restrictions, Bajaj Finance will once again be able to approve and disburse loans, including the issuance of EMI cards, through its 'eCOM' and 'Insta EMI Card' business areas

The Reserve Bank of India (RBI) has removed the restriction placed on Bajaj Finance’s lending products 'eCOM' and 'Insta EMI Card' with immediate effect, the company said in an exchange on Thursday. "Now, we wish to inform that the RBI, vide its letter dated 2 May 2024, based on the remedial actions taken by the Company, has conveyed its decision of lifting the said restrictions on 'eCOM' and online digital 'Insta EMI Card' with immediate effect,” said the financial firm.

With the lift of restrictions, Bajaj Finance, a Non-Banking Financial Company (NBFC), will once again be able to approve and disburse loans, including the issuance of EMI cards, through its 'eCOM' and 'Insta EMI Card' business areas. 

Due to a violation of digital lending norms, the RBI banned the approval and disbursement of new loans under eCOM and digitally through Insta EMI cards. This included the failure to provide customers with crucial fact sheets (KFS) for these two lending products and errors in KFS provided for other digital loans approved by the business.

Additionally, the NBFC notified the exchanges in a letter dated November 17, 2023, of the temporary suspension of issuing Existing Member Identification cards, or "EMI cards," to new consumers.

Customers can shop with an adjustable repayment period for electronics and consumer products with the EMI card at no extra cost. Similarly, the eCOM offering uses loans to facilitate online purchases on sites like Amazon and Flipkart.

Investors were wary of the RBI's restraints, given that HDFC Bank had been subject to limitations for more than a year in 2020. Bajaj Finance had recently asked the central bank to lift the restriction, having begun rectifying some of the flaws prior to the RBI's action.

By September 2023, Bajaj Finance had 42 lakh digitally sourced EMI Card members. Due to the RBI embargo, the company's Q4FY24 profit before taxes decreased by 4 per cent. Bajaj Finance said this week that its March quarter net profit was Rs 3,825 crore, up 21 per cent from the same period last year.

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