RBI Lifts Lending Ban on Navi Finserv Following Compliance Improvements

The Reserve Bank of India (RBI) has officially lifted the lending restrictions placed on Sachin Bansal-led Navi Finserv Limited, allowing the non-banking financial company (NBFC) to resume its loan disbursal activities. The decision, announced on December 2, comes after the regulator expressed satisfaction with the company’s corrective measures and commitment to fair loan pricing.

In its official statement, the RBI noted:
"The Reserve Bank has decided to lift the afore-mentioned restrictions placed on Navi Finserv Limited, with immediate effect."

RBI’s Decision to Lift Restrictions

The central bank had imposed curbs on Navi Finserv in October 2024, along with three other NBFCs, citing serious supervisory concerns over their loan pricing policies. Navi Finserv faced scrutiny for practices involving excessive interest spreads and failure to comply with the Fair Practices Code, including lapses in assessing borrowers' repayment capacities.

Following a comprehensive review and rectification process, the RBI acknowledged Navi Finserv's efforts to overhaul its systems and processes. The regulator emphasized the company’s assurance of adherence to regulatory standards, particularly around transparency and fairness in pricing.

Navi Finserv’s Commitment to Compliance

Sachin Bansal, CEO of Navi Finserv, expressed gratitude to the RBI for its guidance and reaffirmed the company’s commitment to compliance and operational integrity.

“We sincerely thank the Reserve Bank of India for their support and guidance during this period. As we resume our business operations, we are committed to upholding fairness in loan pricing, ensuring regulatory compliance, and maintaining the highest standards of governance and operational excellence,” said Bansal.

The Initial Ban on Navi Finserv

The RBI had restricted Navi Finserv and three other NBFCs—DMI Finance, Asirvad Microfinance Ltd (backed by Manappuram Finance), and Arohan Financial Services Ltd—from disbursing new loans on October 21, 2024. The action stemmed from concerns over excessive weighted average lending rates (WALR) and interest spreads, which were deemed inconsistent with RBI regulations.

In addition to pricing irregularities, Navi Finserv was found in breach of income assessment rules and borrower repayment capacity norms, particularly for microfinance loans.

Moving Forward

With the restrictions now lifted, Navi Finserv can resume its lending operations, providing relief to borrowers and stakeholders. The case underscores the importance of compliance and adherence to regulatory standards for financial entities.

As the lending landscape evolves, Navi Finserv’s reinstatement serves as a reminder of the critical role of governance and fair practices in maintaining the trust of regulators and customers alike.

Disclaimer: This article is for informational purposes only. Readers are advised to seek professional advice before making financial decisions.