India's Bajaj Finance says cenbank lifts ban on lending products

Reuters
·1-min read
FILE PHOTO: A Reserve Bank of India (RBI) logo is seen inside its headquarters in Mumbai

BENGALURU (Reuters) -India's Bajaj Finance said on Thursday the Reserve Bank of India had lifted restrictions on its lending products, allowing it to "resume sanction and disbursal of loans" in the banned business segments.

Shares of the non-banking lender have dropped nearly 5% since the ban was ordered in November, compared with a near 11% jump in the Nifty Financial Services index in the same period.

India's central bank had barred Bajaj Finance from issuing loans under its eCOM and Insta EMI Card lending products, due to deficiencies in adhering to digital lending guidelines.

Bajaj Finance did not issue key information to borrowers under the two products, RBI had said.

Last week, the lender said it had made the required regulatory changes and asked RBI to lift the restrictions.

"The development is pretty positive for Bajaj Finance's business, especially at a time when a competitive player like Kotak Mahindra Bank is temporarily out of the market," said Vinit Bolinjkar, head of research at trading and investments platform Ventura Securities.

Last week, RBI barred Kotak Mahindra Bank from taking on new customers via its online and mobile banking channels, and issuing new credit cards, due to information technology-related deficiencies.

"It is likely that Bajaj Finance will re-invest heavily in these products and go all-out to regain market share," Bolinjkar said.

The Insta EMI card offers consumers pre-approved credit for small-ticket purchases, while eCOM is a consumer-financing facility for online shopping.

(Reporting by Nishit Navin and Siddhi Nayak in Mumbai; Editing by Krishna Chandra Eluri and Shinjini Ganguli)

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