Bajaj Finance shares nosedive 4% as RBI bars lending via 2 digital products

Shares of Bajaj Finance plummeted nearly 4% in early trade on Thursday, a day after the Reserve Bank of India (RBI) directed the country’s largest non-banking financial company in terms of market value to immediately stop loan disbursements under its two digital products, with immediate effect.

Weighed down by the development, Bajaj Finance shares opened lower for the third straight session at ₹6,940, down 3.9% against the previous closing price of ₹7,223.95 on the BSE. In the first hour of trade so far, the NBFC heavyweight declined as much as 4% to ₹6,937.15, while the market capitalisation dipped to ₹4.42 lakh crore.

Bajaj Finance shares have been under stress for the last three sessions, losing nearly 7% during the same period. The stock hit a 52-week high of ₹8,190 on October 6, 2023, and a 52-week low of ₹5,487.25 on March 20, 2023. In the last one year, the counter gained 3.7%, while it rose 7% in the calendar year 2023. The stock added 5.4% in six months, while it lost over 11% in a month.

In an late evening filing on Wednesday, Bajaj Finance said that the RBI in its order dated November 15, 2023, directed the company to stop sanction and disbursal of loans under its two lending products namely, ‘eCOM’ and ‘Insta EMI Card’, with immediate effect. The action was taken due to “non-issuance of key fact statements to the borrowers under these two lending products and the deficiencies in the key fact statements issued in respect of other digital loans sanctioned by the company”, it says.

“Further, these supervisory restrictions will remain in place till the deficiencies observed are made good by the company to the satisfaction of RBI, in terms of issuance of key fact statements to the borrowers,” the exchange filing notes.

Meanwhile, the RBI in a release said that this action was “necessitated due to non-adherence of the company to the extant provisions of digital lending guidelines of Reserve Bank of India, particularly nonissuance of key fact statements to the borrowers under these two lending products and the deficiencies in the key fact statements issued in respect of other digital loans sanctioned by the company”.

“These supervisory restrictions will be reviewed upon the rectification of the said deficiencies to the satisfaction of RBI,” the central bank says in its notification.

The company informs the exchanges that the key fact statement (KFS) are being issued for the loans booked under the above mentioned two lending products. “However, based on the supervisory concerns raised by the RBI, we will undertake a detailed review of the KFS and implement requisite corrective actions to the satisfaction of the RBI at the earliest.”

Bajaj Finance further states that it will rectify observations of the RBI in KFS and comply with the RBI directions at the earliest.

Bajaj Finance is among the top three upper-layer NBFCs as per the RBI recent report. The deposit-taking investment and credit company reported a consolidated net profit of ₹3,551 crore in the July-September quarter of 2022-23, an increase of 28% from ₹2,781 crore in the same period last year. The company's consolidated net interest income (NII) for Q2 increased 26% to ₹8,845 crore from ₹7,002 crore in the same quarter last year. 

Last month, the company launched a qualified institutional placement (QIP) to raise ₹8,800 crore by issuing equity shares. The company will also raise funds via a "preferential issue (PI) of up to 15,50,000 warrants" convertible into an equivalent number of equity shares in a period of 18 months from the date of allotment. 

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