RBI Halts Loans By Four Finance Companies Over High Interest Rates

The Reserve Bank of India (RBI), the banking regulator, has forbidden Navi Finserv (led by Sachin Bansal), DMI Finance, Asirvad Micro Finance, and Arohan Financial Services from issuing and disbursing new loans due to excessive interest rates.

The decision follows the RBI governor’s recent concerns about unsustainable business practices in the sector. Concerns about exorbitant loan rates and infractions of microfinance regulations prompted the ban, which will be effective on October 21, 2024. These organisations can continue to serve existing customers, but they must fix regulatory difficulties before restarting loan disbursements. The RBI will revisit the limits after appropriate corrective actions have been implemented.