RBI bans Navi Finserv
Sachin Bansal, one of the founders of a successful e-commerce company like Flipkart, had founded a new startup, Navi Finserv, some time ago. This non-banking financial sector company is now under the influence of the Reserve Bank of India (RBI). Only the most important work of the company is prohibited and a similar ban has been imposed on three more NBFC companies.
Besides Bengaluru-based Navi Finserv Limited, the Reserve Bank of India has stopped Delhi-based DMI Finance Private Limited, Kolkata-based Aarohan Financial Services and Chennai-based Ashirwad Micro Finance Limited from distributing loans. Now these companies will not be able to grant loans to customers until ordered by the Reserve Bank.
Why were these companies prohibited from granting loans?
The Central Bank found many deficiencies in the working methods of these companies, so granting loans was prohibited. This includes a higher valuation of companies to distribute loans. Therefore, the Reserve Bank of India, using its regulatory and inspection powers, has stopped all these companies from distributing loans.
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The RBI said in a statement that it noticed these deficiencies while reviewing the functioning of NBFCs and mutual fund (MFI) units. In response to this, the distribution of loans was prohibited. The RBI says this action has been taken due to the weightage given in the valuation policy of these companies to the average credit rate and the interest charged on the cost of funds. It has been found that the valuation of these companies does not comply with their regulations.
The central bank also said that the business behavior of these companies does not conform to its code of ethics and that these companies do not follow it properly.
Sachin Bansal Finserv’s boat
After parting ways with Flipkart, Sachin Bansal founded Navi Group with Ankit Aggarwal in the year 2018. The company works in the financial sector digitally. The company functions as a home loan, mutual fund, health insurance, digital gold and UPI payment service. In this, the company carries out personal loan business through its subsidiary Navi Finserv. While its other subsidiaries are Navi General Insurance and Navi AMC.
