Bajaj Finance shares up 7% as RBI lifts curbs on lending via ‘eCOM’, ‘Insta EMI card’
Upstox
2 min read • Updated: May 3, 2024, 12:04 PM
Summary
Bajaj Finance was forced to halt the loan issuance through ‘eCOM’ and ‘Insta EMI Card’ in November, after the RBI found that it was not disclosing details such as fees, charges and recovery practices in its key fact statement.
Shares of Bajaj Finance, the country's largest non-banking financial company (NBFC), surged by 7% in the market's opening hour on Friday, a day after the Reserve Bank of India (RBI) lifted the curbs imposed on the issuance of loans via its two key digital lending platforms — ‘eCOM’ and ‘Insta EMI card’.
At 9:42 am, Bajaj Finance was trading at ₹7,362.9, up 6.98% as against the previous day's close.
The restrictions on eCOM and InstaEMI card were slapped by the central bank on November 15, citing the alleged non-compliance of norms related to the information that is to be disclosed to the customers. The NBFC was accused of not sharing details such as fees, charges, and recovery practices in its key fact statement.
As a result, Bajaj Finance was forced to halt the loan issuance through the two platforms. The Insta EMI Card allows customers to purchase an array of items – consumer goods to electronics – on equated monthly instalments with a flexible repayment tenure. The eCOM option offers similar benefits while purchasing through e-commerce platforms such as Amazon and Flipkart.
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“Now, we wish to inform that the RBI, vide its letter dated May 2, 2024, based on the remedial actions taken by the company, has conveyed its decision of lifting the said restrictions on eCOM and online digital ‘Insta EMI Card’, with immediate effect,” Bajaj Finance said in a regulatory filing.
“The company would now resume sanction and disbursal of loans in the above two business segments including issuance of EMI cards,” it added.
The RBI embargo had impacted Bajaj Finance, as the company’s pre-tax profit for the March quarter declined by 4% sequentially. The NBFC’s stock was also hammered since the restrictions were imposed, facing an erosion of nearly 5% in value.
Bajaj Finance investors were concerned following the RBI action, as a similar restriction imposed on the HDFC Bank in 2020 was lifted only after a year’s period.
Meanwhile, Bajaj Finance posted its earnings for the quarter ended March 31, 2024 last week. The net profit rose 21% year-on-year to ₹3,825 crore.
On May 2, the company’s shares settled at ₹6,882.7 apiece on the NSE, down 0.59% as against the previous day’s close.