RBI Pauses Digital Lending Products from Bajaj Finance eCOM and Insta EMI Card – Major Change Ahead!

Bajaj Finance has been instructed by the Reserve Bank of India (RBI) to cease approving and distributing loans through its online lending products, eCOM and Insta EMI Card, effective immediately. The RBI’s decision was made due to Bajaj Finance’s failure to comply with the existing regulations for digital lending. The RBI emphasized that the company did not provide borrowers with essential information regarding the lending products, known as key fact statements. Additionally, the RBI identified other shortcomings in the digital loans approved by the company.

These supervisory restrictions will be reviewed once the said deficiencies are rectified to the satisfaction of the RBI, the central bank added. In August 2022, the RBI announced a set of regulations aimed at regulating digital lending. This initiative aims to protect borrowers and curb fraud and illegal activities that are becoming more common in the industry.

RBI directed Bajaj Finance to stop issuance through eCOM and Insta EMI Card

“The Reserve Bank of India, in exercise of its powers under Section 45L (1) (b) of the Reserve Bank of India Act, 1934, has directed Bajaj Finance Ltd. to stop sanctioning and disbursement of loans under its two loan products ‘eCOM’ and ‘Insta EMI Card,’ which will take effect immediately,” the central bank said in a statement.

“This action is necessary due to non-compliance of the company with the extant provisions of the Reserve Bank of India’s Digital Lending Guidelines, particularly as key facts are not provided to the borrowers based on these two loan products and there are gaps in the key statements of other digital loans sanctioned by the company,” the RBI said, highlighting the reason for denying the service.

Insta EMI Card (also known as EMI Network Card) is a corporate finance solution that allows users to shop through online channels and purchase over 1 million products from a choice of no EMIs. Customers also get a pre-approved loan limit of up to Rs. 2 lakh and flexible repayment period up to 60 months.

As of now, it looks like those who already own this card will not be able to get the EMI offers until RBI reiterates for now. It is unclear whether repayments will be suspended for this period as well.