India’s central bank ordered four non-bank lenders, including Navi Finserv and DMI Finance, to halt loans from October 21, citing excessive interest rates and regulatory breaches.
The Reserve Bank of India said (PDF) the firms violated rules on pricing, income assessment, and asset classification. This action follows months of warnings about responsible lending practices, it added. The affected companies can continue servicing existing customers but must implement remedial measures to resume new lending.
Many startups and large tech firms, including Google, Samsung, and Airtel, work with DMI Finance to extend loans to their customers.
The news is also the latest setback for Navi, a Bengaluru-based startup founded by Flipkart co-founder Sachin Bansal. The central bank earlier rejected Navi’s application for a banking license.
The new order comes at a time when Navi has been in talks with investors to raise its maiden external funding, TechCrunch earlier reported.
“Navi Finserv Limited is committed to conducting its business operations with the highest standards of compliance, customer service, and transparency,” a Navi spokesperson said in a statement. “The company is reviewing the directions received from the Hon’ble Reserve Bank of India and will work with them, and address all the concerns raised with promptness and completeness.”
