RBI lifts restrictions on Sachin Bansal-led Navi Finserv

The Reserve Bank of India (RBI) has lifted the supervisory restrictions imposed on Sachin Bansal-led Navi Finserv, effective immediately. This decision follows a series of regulatory measures that had temporarily barred the non-banking finance company (NBFC) from sanctioning and disbursing loans, as well as charging high-interest rates, effective from October 21.

Following the imposition of these restrictions, Navi Finserv had to cancel a planned fundraising activity of Rs 100 crore. Additionally, the rating agency CRISIL placed Navi's ratings on "rating watch."

In a recent statement, the RBI confirmed that it had held several rounds of discussions with Navi Finserv to address and rectify the identified deficiencies. "Having satisfied itself based on the company’s submissions, and considering the adoption of revamped processes and systems, the RBI has decided to lift the restrictions placed on Navi Finserv with immediate effect," the statement read. The central bank emphasized the company's commitment to ongoing adherence to regulatory guidelines, particularly concerning fairness in loan pricing.

Navi Finserv also released a statement, noting that it had worked diligently to address the deficiencies pointed out by the RBI. The company emphasized its focus on delivering transparent, compliant, and customer-first financial solutions. "As operations resume, we are committed to addressing customer needs effectively and driving financial inclusion with integrity," the statement added.

Sachin Bansal, CEO of Navi Finserv Ltd., expressed gratitude towards the RBI for its guidance and support. He reiterated the company’s commitment to maintaining high standards of governance and operational excellence. "As we resume our business operations, we are committed to ensuring enduring compliance, especially with respect to fairness in loan pricing," Bansal said.

The restrictions on the other three NBFCs—Asirvad Microfinance, Arohan Financial Services, and DMI Finance—remain in place. These restrictions were imposed due to supervisory concerns regarding their pricing policies, particularly their weighted average lending rate (WALR) and the interest spread over their cost of funds, which were deemed excessive.

The RBI's decision to lift restrictions on Navi Finserv follows the central bank governor’s warning in the October monetary policy statement. The governor cautioned NBFCs, including microfinance institutions (MFIs), against prioritizing excessive equity returns through exorbitant interest rates and high processing fees.

Prior to the restrictions, Navi had stated its commitment to conducting business operations with high standards of compliance, customer service, and transparency. With the lifting of the restrictions, the company can now proceed with its business plans, including the previously halted fundraising activities, and continue its efforts towards financial inclusion and customer-centric solutions.

CRISIL is expected to resolve Navi’s 'rating watch' status now that the restrictions have been lifted and business operations are set to resume.

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