Navi Finserv Allowed To Make Disbursals Sanctioned Before Oct 20

SUMMARY

The reprieve will offer “substantial relief” to homebuyers whose home loans were sanctioned before the RBI’s crackdown on the company

Earlier this month, RBI barred Navi FInserv from sanctioning fresh loans after the close of business of October 21 citing “material supervisory concerns”

Navi Finserv reported an operating revenue of INR 1,906.2 Cr in the financial year 2023-24 (FY24), down from INR 2,040.6 Cr in FY23

Barred from dishing out fresh loans, Sachin Bansal-led Navi Finserv on Tuesday (October 29) said that the Reserve Bank of India (RBI) has allowed it to make scheduled home loan disbursals sanctioned before October 20.

“The Reserve Bank of India (RBI) has allowed Navi Finserv to start making scheduled home loan disbursals, sanctioned before October 20, 2024. The permission has been provided until December 31, 2024,” Navi Finserv said as per news agency PTI.

The company added that the reprieve will offer “substantial relief” to homebuyers whose home loans were sanctioned before the RBI’s crackdown on the company.

Notably, the central bank, earlier this month, barred the fintech startup from sanctioning fresh loans after the close of business on October 21, citing “material supervisory concerns”, including alleged usurious pricing.

Similar directions were also issued against DMI Finance, Arohan Financial Services and Asirvad Micro Finance.

The RBI is also believed to have cracked the whip on the four companies over excessive interest rates, non-compliance with its regulations, discrepancies in assessing household incomes, irregularities in loan classification, outsourcing financial services, and inadequate disclosure of interest rates and fees.

The aftermath saw Navi Finserv calling off its proposed INR 100 Cr bond sale, which was originally scheduled to open for bidding on October 21. At the time, the company said that it maintained a healthy liquidity position, adding that there’s “no immediate need for external funding at this point”.

The clampdown will likely have a direct bearing on the IPO plans of Navi Finserv’s parent Navi Technologies, which had even filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in 2022. It later shelved the plan.

Navi Finserv reported an operating revenue of INR 1,906.2 Cr in the financial year 2023-24 (FY24), down from INR 2,040.6 Cr in FY23. Meanwhile, the fintech’s consolidated profit after tax (PAT) slipped 56% year-on-year (YoY) to INR 115.6 Cr in the fiscal under review.