RBI halts Bajaj Finance eCOM and Insta EMI Card over disclosure lapse

What the Record Shows

On 15 November 2023 the Reserve Bank of India directed Bajaj Finance Limited, India's largest retail non-banking finance company, to stop the sanction and disbursal of loans under two of its lending products, "eCOM" and the "Insta EMI Card", with immediate effect. The direction was issued under Section 45L(1)(b) of the Reserve Bank of India Act, 1934, and imposed no monetary penalty.

The Reserve Bank said the action was for non-adherence to its Guidelines on Digital Lending dated 2 September 2022, and in particular for the non-issuance of Key Fact Statements to borrowers under these two products, together with deficiencies in the Key Fact Statements issued for the company's other digital loans. In the regulator's own words, the "supervisory restrictions will be reviewed upon the rectification of the said deficiencies to the satisfaction of RBI".

It is important to be precise about what this was and was not. This was a supervisory-compliance action about disclosure, not a finding of dishonesty, mis-selling for gain, or loss caused to borrowers. No individual director or officer of the company was named, no fraud was alleged, and no borrower was said to have been cheated. The order went to how loan terms were disclosed, not to whether the loans were repaid or the interest wrongly taken.

The two products sit at the mass-market end of retail credit: eCOM and the Insta EMI Card are the buy-now-pay-later and consumer-durable EMI rails used at retail points of sale, so the direction touched a high-volume channel rather than a niche line.

How It Worked

The Key Fact Statement is the disclosure hinge of the Reserve Bank's digital-lending framework. Under the September 2022 guidelines, a lender must give the borrower a standardised statement, before the loan agreement is executed, setting out the all-in cost and terms of the loan in a single comparable format: the annual percentage rate, the recovery mechanism, the details of the grievance-redress officer, and the cooling-off or look-up period during which the borrower may exit without penalty beyond proportionate charges.

The purpose is to ensure that a borrower taking a quick point-of-sale EMI knows the real cost of the credit and the exit route before committing, rather than discovering fees and rates afterwards. Because these loans are often sanctioned in seconds at a checkout or in an app, the guidelines make the up-front, standardised disclosure mandatory rather than optional.

The Reserve Bank's finding, as stated in its press release, was that under the eCOM and Insta EMI Card products the company did not issue the Key Fact Statement to borrowers at all, and that the statements it did issue for other digital loans carried deficiencies. That is a breach of the disclosure requirement itself; the regulator did not allege that the underlying interest rates were unlawful or that money was taken improperly. The remedy for such a breach is to fix the disclosure and satisfy the supervisor, which is the path the order left open.

The choice of instrument reflects that. Section 45L(1)(b) of the RBI Act lets the Reserve Bank give directions to a non-banking financial company on how it conducts its business; halting new sanctions on the two products was a supervisory brake to compel rectification, not a punishment with a fine attached.

Who Lost Money

On the record, no borrower was found to have lost money. The Reserve Bank did not quantify any borrower loss, did not allege that excess interest or unlawful charges were collected, and imposed no penalty, so there is no figure of harm to report and no restitution to track. The deficiency was in the disclosure that must accompany a loan, not in the pricing or the repayment of the loans themselves.

The immediate commercial consequence fell on the company. A stop on new sanctions and disbursals under two mass-market products removes a revenue stream for as long as the restriction lasts, and for the largest retail NBFC operating at thousands of points of sale that is a material, if temporary, business cost. Existing borrowers' running loans were not cancelled by the order, which addressed fresh sanction and disbursal.

The broader interest served is the borrower's right to know. The value of a Key Fact Statement is realised precisely when something goes wrong later: it is the document that tells a borrower what the loan actually cost and whom to complain to. Enforcing its issuance protects future borrowers on the product rather than compensating past ones.

Where It Stands Now

The restrictions have been lifted. Following remedial action by the company, the Reserve Bank withdrew the supervisory restrictions on the eCOM and Insta EMI Card products with effect from 2 May 2024, less than six months after they were imposed, and Bajaj Finance resumed sanction and disbursal under both. The matter is therefore closed on the regulatory record: the deficiencies were rectified to the Reserve Bank's satisfaction and the products returned to normal operation.

Because the action carried no monetary penalty and named no individual, there was no appeal to pursue and no proceeding left running. What remains is the supervisory history: a direction issued, a rectification made, and the restriction withdrawn.

This was a regulatory-compliance action and at no stage a criminal one; there was no finding of guilt against the company or any person, and none is implied by the fact that the Reserve Bank acted. The current and settled position is that the products are operating and the disclosure gap the regulator identified has been closed.

What It Means

The episode is a useful illustration of how the Reserve Bank now supervises digital and point-of-sale lending: not only by policing interest rates and recovery conduct, but by enforcing the up-front disclosure that lets a borrower judge a loan before taking it. That the largest retail NBFC could have new lending on two products halted purely for a disclosure gap signals how central the Key Fact Statement has become.

For a borrower, the practical takeaway is to expect and read that statement. Before accepting any digital or checkout EMI, you are entitled to a Key Fact Statement showing the annual percentage rate, the total cost, the grievance officer and the cooling-off period; if it is not offered, ask for it, and use the stated APR rather than the headline "no cost EMI" label to judge the deal. An EMI calculator can help translate a rate and tenure into the actual monthly and total cost before you sign.

Readers can see how the regulators pursue lending and disclosure conduct across the enforcement archive and, for borrower-side protections against aggressive lending and recovery, the loan-trap guide. Parallel supervisory and enforcement actions, such as the DGGI's crackdown on offshore gaming platforms, show the same emphasis on bringing consumer-facing money flows inside a compliant framework.

FAQ

Did the RBI find that Bajaj Finance defrauded borrowers?

No. The RBI made no finding of fraud or dishonesty and imposed no penalty. Its action was a supervisory-compliance direction about the non-issuance of Key Fact Statements under two products; it concerned how loan terms were disclosed, not whether borrowers were cheated or overcharged.

What exactly did the Reserve Bank order?

On 15 November 2023 the RBI directed Bajaj Finance to stop sanction and disbursal of loans under its eCOM and Insta EMI Card products with immediate effect, under Section 45L(1)(b) of the RBI Act, 1934. The reason was non-adherence to the Digital Lending Guidelines of 2 September 2022, specifically the non-issuance of Key Fact Statements.

What is a Key Fact Statement?

It is a standardised disclosure a digital lender must give a borrower before the loan is signed, setting out the annual percentage rate, the recovery mechanism, the grievance-redress officer and the cooling-off period. It lets a borrower see the true cost and exit terms of a loan up front, in a comparable format.

Are the restrictions still in force?

No. The Reserve Bank lifted the restrictions with effect from 2 May 2024 after Bajaj Finance rectified the deficiencies to its satisfaction, and the company resumed lending under both products. The matter is closed on the regulatory record.

Was any penalty imposed on Bajaj Finance?

No monetary penalty was imposed. The action was a supervisory restriction on new sanctions and disbursals under the two products, intended to compel rectification, and it was withdrawn once the disclosure deficiencies were fixed.

Where can I read the official order?

The Reserve Bank's press release of 15 November 2023, "Action against Bajaj Finance Ltd.", sets out the direction and the reasons, and its subsequent communication of 2 May 2024 recorded the withdrawal of the restrictions.

This report is based on the Reserve Bank of India press release of 15 November 2023 directing action against Bajaj Finance Ltd. and the subsequent RBI communication of 2 May 2024 lifting the restrictions, reviewed on 30 July 2026.