The Reserve Bank of India (RBI) on Thursday barred Asirvad Micro Finance, Arohan Financial Services, DMI Finance and Navi Finserv from granting and disbursing loans due to pricing concerns. The trading restrictions imposed on these non-banking financial companies (NBFCs) apply from October 21, 2024.

“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 found to be excessive and not in compliance with the regulations,” the RBI said in a notification.

Over the past few months, the Reserve Bank has been raising awareness among businesses through various channels on the need to use their regulatory freedom responsibly and ensure fair, reasonable and transparent pricing, particularly for low value loans. However, unfair and usurious practices continued to be observed during on-site inspections as well as in data collected and analyzed off-site, the central bank said.

“In addition to predatory pricing, these NBFCs were found not to be adhering to regulatory guidelines on assessment of household income and consideration of existing/proposed monthly repayment obligations with respect to their microfinance loans. Discrepancies were also observed with respect to Income Recognition and Asset Classification (IR&AC) norms, resulting in loan sustainability, gold loan portfolio conduct, mandatory disclosure requirements on investment rates. interest and fees, outsourcing of basic financial services, etc. ”, the RBI said.

These trading restrictions came into effect as of the close of business on October 21, 2024 to facilitate the closing of pending transactions, if any. These business restrictions do not prevent these companies from serving their existing customers and conducting collection and recovery processes in accordance with existing regulatory guidelines, the RBI said.

These trading restrictions will be reviewed upon receipt of confirmation from businesses that appropriate corrective action has been taken to comply at all times with regulatory guidelines, specifically their pricing policy, risk management processes, customer service and marketing aspects. resolution of grievances, to the satisfaction of the Reserve Bank.