RBI Lifts Curbs On Sachin Bansal’s Navi Finserv

The Reserve Bank of India has lifted the restrictions placed on Sachin Bansal-led Navi Finserv on sanctioning and disbursing loans. 

The RBI had issued a cease and desist order, barring Navi and three other non-banking financial companies (NBFCs) from issuing any loans post  October 21. Its action was a result of excessive interest rates and non-compliance with its regulations.

Other concerns included irregularities in loan classification, outsourcing financial services, and inadequate disclosure of interest rates and fees.

In a statement on Monday (December 2), the RBI said that it had several rounds of interactions with the startup to understand how it planned to rectify the deficiencies before arriving at its decision. 

“… Having satisfied itself based on company’s submissions, and in view of adoption of revamped processes, systems, and the company’s commitment to ensure adherence to the regulatory guidelines on an ongoing basis…the Reserve Bank has decided to lift the aforementioned restrictions placed on Navi Finserv Limited, with immediate effect,” the central bank said.

Incorporated by Flipkart cofounder Sachin Bansal in 2018, Navi Finserv provides personal, vehicle, and home loans through its app. A majority of its revenue comes from interest income on loans, investments, and deposits with banks.

Following the lifting of the ban, Navi Finserv said it worked on addressing‬‭ the identified‬‭ deficiencies‬‭ and‬‭ revamp‬‭ its‬‭ processes‬‭ and systems to the satisfaction of the RBI.‬

“We‬‭ are‬‭ grateful‬‭ to‬‭ the‬‭ Reserve‬‭ Bank‬‭ of‬‭ India‬‭ for‬‭ all‬‭ their‬‭ guidance‬‭ and‬‭ support‬ ‭ throughout‬‭ this‬‭ process.‬‭ As‬‭ we‬‭ resume‬‭ our‬‭ business‬‭ operations,‬‭ we‬‭ are‬‭ committed‬‭ to‬‭ ensuring‬‭ enduring‬‭ compliance,‬‭ especially‬‭ with‬‭ respect‬‭ to‬‭ fairness‬‭ on‬‭ loan‬‭ pricing,‬‭ and‬‭ to‬ maintain‬‭ the‬‭ highest‬‭ standards‬‭ of‬‭ governance‬‭ and‬‭ operational‬‭ excellence,” Bansal said in a statement.

Prior to the RBI ban, the startup secured a $24.5 Mn (around INR 206 Cr) business loan securitisation deal with Goldman Sachs (India) Finance to fortify its loan books.

However, the RBI’s ban prevented it from engaging in its bread-and-butter loan business. Following the central bank’s action, Navi called off its proposed INR 100 Cr bond sale on October 21. 

In a statement, its head of lending division Shobhit Agarwal then said that the company aims to maintain a healthy liquidity position and that there was “no immediate need for external funding at this point”.

Amid the RBI’s restrictions, Navi overtook CRED to emerge as India’s fourth largest UPI player in October. It processed 157.51 Mn transactions in the month as against 120.41 Mn in September. 

Navi Finserv reported an operating revenue of INR 1,906.2 Cr in the financial year 2023-24 and a profit after tax of INR 115.6 Cr.