India's central bank on Wednesday barred Bajaj Finance, one of India's largest consumer lenders, from issuing loans under two products with immediate effect, due to deficiencies in adhering to digital lending guidelines.
Bajaj Finance did not issue key information to borrowers under the eCOM and Insta EMI Card lending products, the Reserve Bank of India (RBI) said in a statement.
There were deficiencies in information for other digital loans and the restrictions imposed will be reviewed after Bajaj Finance rectifies these deficiencies, the RBI said.
The Insta EMI card offers consumers pre-approved credit up to ₹200,000 (about $2,400) for small ticket purchases, according to Bajaj Finance's website. No description is available for the eCOM product on the website.
The non-bank lender had total assets under management of ₹2.14 trillion ($25.76 billion) as of September 30, according to an investor presentation.
It had 41.9 million EMI cards outstanding, the presentation said.
Bajaj Finance did not immediately respond to a Reuters email seeking comment.
The central bank's digital lending guidelines, enforced last year, require that a lender disclose all fees and charges to borrowers upfront and also detail its recovery practices in the event of a default.
The guidelines were introduced after complaints of unfair digital lending practices, including inadequate information on charges associated with digital loans.
This is the first time that the RBI has used these rules to restrict a large player from adding customers, said Srinath Sridharan, an independent policy researcher.
"These supervisory actions do well in assuring the consumers of their rights," Mr. Sridharan said.
