By our Commercial Correspondent
Mumbai: The Reserve Bank of India (RBI) has ordered on Oct 17 four non-banking financial corporations (NBFCs) to cease and desist from sanction and disbursal of loans, charging them with usurious pricing and other regulatory deviations.
The NBFCs rapped by the central bank are : Asirvad Micro Finance Ltd, the MFI arm of Manappuram Finance Ltd; Arohan Financial Services Ltd; Mitsubishi UFG-backed DMI Finance Private Limited and Navi Finserv Ltd.
“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,” the RBI said its notification released here.
In addition to usurious pricing, the four NBFCs were also found to be in violation of regulatory guidelines on assessment of household income and consideration of existing or proposed monthly repayment obligations in respect of microfinance.
Apart from this, the banking regulator had also found deviations such as evergreening of loans, conduct of gold loans portfolio, mandated disclosure requirements on interest rates and fees and outsourcing of core financial services, among others.
The business restrictions will kick in on Oct 21 and will not affect the services provided to the existing customers. The curbs will be reviewed once the RBI is satisfied with the remedial actions taken by the companies , the RBI said in the notification.
Navi Finserv and Asrvad Microfinance, in separate statements, said they value the RBI’s feedback and would strive to address all the concerns raised by the regulator. Asirvad said a board meeting has been concerned urgently, and the board will monitor the corrective action in a time-bound plan.
