RBI lifts ban on sanction, disbursal of loans by Arohan Financial Services
This story was originally published at 20:13 IST on 3 January 2025
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MUMBAI – The Reserve Bank of India has removed with immediate effect the restrictions imposed on Arohan Financial Services Ltd. from sanctioning and disbursing loans, it said in a release on Friday. The central bank had imposed the restrictions in October.
The RBI decided to lift the restrictions after the non-bank lender submitted various compliances to the central bank and adopted revamped processes, systems especially for ensuring fairness in loan pricing.
Along with Arohan Financial Services, the RBI had restricted Asirvad Micro Finance Ltd., DMI Finance Pvt. Ltd. and Navi Finserv Ltd. from sanctioning and disbursal of loans in October. The central bank took this action based on material supervisory concerns observed in the pricing policy of these companies in terms of their weighted average lending rate and the interest spread charged over their cost of funds, which were found to be excessive and not in adherence with RBI regulations.
"These non-bank lenders were variously found to be in non-adherence with the regulatory guidelines on assessment of household income and consideration of existing or proposed monthly repayment obligations in respect of their microfinance loans. Deviations were also observed in respect of Income Recognition & Asset Classification (IR&AC) norms resulting in evergreening of loans, conduct of gold loan portfolio, mandated disclosure requirements on interest rates and fees, outsourcing of core financial services, among others," the RBI had said in October. End
Reported by Kshipra Petkar
Edited by Ashish Shirke
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