RBI lifts supervisory restrictions on Sachin Bansal-led Navi Finserv

Following the imposition of restrictions on Navi, the lender cancelled a scheduled fund raising activity of Rs 100 crore. Rating agency CRISIL had also put Navi's ratings on "rating watch"

The Reserve Bank of India (RBI) has lifted the restrictions imposed on Sachin Bansal-led Navi Finserv with immediate effect. This move comes just over a month after the central bank barred the non-banking finance company (NBFC), along with three others, from sanctioning and disbursing loans or charging exorbitant interest rates to borrowers, effective from October 21.

 

In a statement, the RBI said that following the regulatory restrictions imposed on the Bengaluru-based NBFC, it held several rounds of discussions with the company to rectify deficiencies.

 

“Now, having satisfied itself based on the company’s submissions, and in view of the adoption of revamped processes, systems, and the company’s commitment to ensure adherence to the regulatory guidelines on an ongoing basis, especially for ensuring fairness in loan pricing, RBI has decided to lift the restrictions placed on Navi Finserv with immediate effect,” the central bank said in the statement. 

The company has worked to address identified deficiencies, and revamp its processes and systems, to the satisfaction of the RBI, Navi Finserv said in a statement, adding that the company is now focused on delivering transparent, compliant, and customer-first financial solutions. “As operations resume, the company remains committed to addressing customer needs effectively and driving financial inclusion with integrity”, the company said.

 

 

“We are grateful to RBI 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, CEO, Navi Finserv Ltd. 

 

The other entities directed by the RBI to cease and desist from sanctioning and disbursing loans included Asirvad Microfinance, Arohan Financial Services, and DMI Finance.

 

While the restrictions on Navi Finserv have been lifted, those on the other three companies remain in place.

 

On October 17, the RBI imposed restrictions on these four NBFCs based on material supervisory concerns observed in their pricing policies, particularly in terms of their weighted average lending rate (WALR) and the interest spread charged over their cost of funds, which were found to be excessive and not in compliance with regulations.

 

The restrictions followed the RBI governor’s caution in the October monetary policy statement, where he warned NBFCs, including microfinance institutions (MFIs), against prioritising excessive equity returns. He expressed concern over exorbitant interest rates coupled with high processing fees and frivolous penalties.

 

Navi had previously stated that it was “committed to conducting its business operations with the highest standards of compliance, customer service, and transparency”.

 

Following the imposition of restrictions, the lender cancelled a scheduled fund-raising activity of Rs 100 crore. Rating agency Crisil had also placed Navi’s ratings on “rating watch”. Crisil had earlier stated that the 'rating watch' would be resolved once all restrictions imposed by the RBI were lifted and business operations resumed.