RBI lifts loan disbursal curbs on Sachin Bansal-led Navi Finserv

The Reserve Bank of India (RBI) has lifted the ban imposed on Sachin Bansal-led non-banking financial company (NBFC) Navi Finserv Limited on Monday, December 2, according to the official release from the banking regulator.

“The Reserve Bank has decided to lift the afore-mentioned restrictions placed on Navi Finserv Limited, with immediate effect,” said RBI in a press release. 

The Indian banking regulator also said that after multiple rounds of rectification with the NBFC, the RBI is now satisfied with the company's submissions.

RBI, given the company's adoption of the revamped processes, systems, and its commitment to ensuring adherence to the regulatory guidelines, especially on ensuring fairness in loan pricing, has lifted the restrictions placed on the non-banking lender. 

“We‬‭ are‬‭ grateful‬‭ to‬‭ the‬‭ Reserve‬‭ Bank‬‭ of‬‭ India‬‭ for‬‭ all‬‭ their‬‭ guidance‬‭ and‬‭ support‬ ‭ throughout‬‭ this‬‭ process.‬‭ As‬‭ we‬‭ resume‬‭ our‬‭ business‬‭ operations,‬‭ we‬‭ are‬‭ committed‬‭ to‬‭ ensuring‬‭ enduring‬‭ compliance,‬‭ especially‬‭ with‬‭ respect‬‭ to‬‭ fairness‬‭ on‬‭ loan‬‭ pricing,‬‭ and‬‭ to‬ maintain‬‭ the‬‭ highest‬‭ standards‬‭ of‬‭ governance‬‭ and‬‭ operational‬‭ excellence,” said‬‭ Sachin‭ Bansal, the chief executive officer (CEO) of Navi Finserv Ltd. in response to RBI's release. 

Why did RBI restrict Navi's lending business?

On October 17, 2024, the Reserve Bank of India scrutinized Navi Finserv and three other non-banking financial companies (NBFC), citing material supervisory concerns related to loan pricing practices.

Sachin Bansal's Navi Finserv, DMI Finance, Asirvad Micro Finance Ltd (backed by Manappuram Finance), and Arohan Financial Services Ltd were the four NBFCs which RBI barred from sanctioning and disbursing new loans and then closing off business on October 21. 

“This action is based on material supervisory concerns observed in the pricing policy of these companies in terms of their weighted average lending rate (WALR) and the interest spread charged over their cost of funds, which are found to be excessive and not in adherence with the regulations,” said RBI in its official statement. 

RBI also noted back then that the breaches were not limited to pricing. The non-banking lender Navi Finserv Limited is a middle-layer category-level NBFC registered with the central bank. 

Mint reported earlier that the NBFC lenders failed to follow the Fair Practices Code, violated rules around income assessments, and disregarded loan repayment capacity norms for microfinance borrowers.