The Reserve Bank of India (RBI) has taken significant action against four non-banking financial companies (NBFCs), in exercise of its powers under Section 45L(1)(b) of the Reserve Bank of India Act , 1934.

The RBI has issued directions to Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited and Navi Finserv Limited, to cease and desist from sanctioning and disbursing loans, with effect from the close of business on October 21, 2024.

The move is part of the RBI’s ongoing efforts to ensure stability and compliance in the financial sector.

“This action is based on significant supervisory concerns observed in the pricing policy of these companies in terms of their weighted average loan rate (WALR) and the interest spread charged on their cost of funds, which s are excessive and not in compliance with the regulations set out in the guidelines of the Master Directorate – Reserve Bank of India (Regulatory Framework for Microfinance Loans), 2022 dated March 14, 2022 (updated on July 25, 2022) and the Master Directorate – Reserve Bank of India (non-banking). Financial Company–Scale Based Regulatory Directions, 2023, dated October 19, 2023 (updated March 21, 2024). fair practices issued by the Reserve Bank,” RBI said in a statement.