Navi Calls Off INR 100 Cr Bond Sale After RBI Crackdown

Sachin Bansal’s Navi Finserv has unexpectedly called off its proposed INR 100 Cr bond sale amid regulatory scrutiny over its lending practices.

Navi’s planned bond sale was scheduled to open for bidding today (October 21). The non-banking finance company (NBFC) planned to raise INR 100 Cr by issuing two-year and three-month bonds, Reuters reported.

However, the fintech unicorn has now withdrawn the issue after “careful consideration.” Shobhit Agarwal, head of the lending division of Navi Finserv, said that the company maintains a healthy liquidity position and that there’s “no immediate need for external funding at this point.”

The company’s decision to call off its planned bond sale comes days after the Reserve Bank of India (RBI) barred four NBFCs, including Navi, from sanctioning and disbursing new loans, citing exorbitant interest rates charged by them on microloan borrowers. 

India’s banking regulator said that its action was based on concerns around “pricing policy of these companies in terms of their weighted average lending rate and the interest spread charged over their cost of funds,” which the RBI found “to be excessive” and in violation of regulatory norms.

The RBI’s scrutiny comes at a critical time when Navi Finserv’s parent Navi Technologies is planning to float an initial public offering (IPO). While the company filed its draft red herring prospectus (DRHP) with SEBI in 2022 to raise INR 3,350 Cr via an initial share sale, it has yet to launch its IPO.

Of the total IPO proceeds, the company plans to invest INR 2,370 Cr in Navi Finserv and another 150 Cr in Navi General Insurance. 

Navi Finserv’s consolidated operating revenue stood at INR 1,906.2 Cr in the financial year 2023-24 (FY24) as against INR 2,040.6 Cr in FY23. Meanwhile, following the sale of its subsidiary Chaitanya, the consolidated profit after tax (PAT) from continued operations slipped 56% year-on-year (YoY) to INR 115.6 Cr in FY24. 

Recently, it was also reported that Navi overtook Amazon Pay to become India’s sixth largest UPI player with almost 89 Mn transactions in August.

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