RBI lifts ban on Sachin Bansal-led Navi Finserv

02 Dec 2024, 06:49 PM

In October, the banking regulator had barred Navi Finserv and three other NBFCs to "cease and desist" from sanction and disbursal of loans.

Team Head&Tale

The Reserve Bank of India (RBI) has lifted the ban imposed on Sachin Bansal-led Navi Finserv Limited, allowing the non-banking financial company (NBFC) to resume loan sanctions and disbursals. 

In October, the banking regulator had barred Navi Finserv and three other NBFCs to "cease and desist" from sanction and disbursal of loans. This action was 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, which are found to be excessive and not in adherence with the regulations.

The RBI in its statement, had said, “The Reserve Bank of India has today, in exercise of its powers under Section 45L(1)(b) of the Reserve Bank of India Act, 1934, issued Directions to the following NBFCs to cease and desist from sanction and disbursal of loans, effective from close of business of October 21, 2024.”

On Monday, December 2, the RBI issued a statement saying, "...Subsequently, RBI had several rounds of interaction with the company for rectification of deficiencies. Now, having satisfied itself based on company’s submissions, and in view of adoption of revamped processes, systems, and the company’s commitment to ensure adherence to the Regulatory Guidelines on an ongoing basis, especially for ensuring fairness in the loan pricing, the Reserve Bank has decided to lift the afore-mentioned restrictions placed on Navi Finserv Limited, with immediate effect."

The other three NBFCs barred from disbursing loans include, DMI Finance, Navi Finserv, Asirvad Micro Finance Limited, and Arohan Financial Services Limited.

Navi was founded in 2018 by Bansal and Ankit Agarwal. Recently, the NBFC closed a $24.5 million loan securitization transaction with Goldman Sachs (India) Finance Private Limited.

Navi Finserv's FY24 revenue from operations fell to Rs 1,906 crore from Rs 2,041 crore in FY23; and the interest income saw a 12.3% decline year-on-year. The company's operating profit declined by more than 50%, driven by a fall in collections and an increase in loan write-offs -- which surged 3.2X to Rs 406 crore in FY24 up from Rs 125 crore in FY23.

In October, Navi emerged surpassed CRED to become the fourth-largest player in UPI by volume.