RBI restricted four NBFCs over loan pricing in 2024, then lifted curbs

What the Record Shows

By order dated 17 October 2024, made public in a press release titled "Action against select NBFCs including NBFCs-MFIs", the Reserve Bank of India (RBI) directed four non-banking financial companies to cease and desist from the sanction and disbursal of loans with effect from the close of business on 21 October 2024. The four were Asirvad Micro Finance Ltd (Chennai), Arohan Financial Services Ltd (Kolkata), DMI Finance Pvt Ltd (New Delhi) and Navi Finserv Ltd (Bengaluru). RBI lifted these restrictions on all four companies within about three months, between December 2024 and early 2025, after each had remediated the concerns RBI raised.

This was a supervisory action on pricing and conduct. It was not a monetary penalty, and it was not a finding of any offence. RBI named no individual and recorded no finding of wrongdoing against any of the four companies. Existing customers could continue to be serviced throughout; the direction applied only to fresh sanction and disbursal of loans.

RBI's stated ground, in its words, was "material supervisory concerns" in the pricing policy of these companies, specifically their weighted average lending rate (WALR) and the interest spread charged over their cost of funds, which RBI found "excessive and not in adherence with the regulations".

The direction was operative from 21 October 2024 rather than interim in the tribunal sense. It was a supervisory measure that RBI could withdraw, and did withdraw, once satisfied that each company had put matters right.

How It Worked

Per RBI's press release, the central concern was price. RBI examined the weighted average lending rate these lenders charged and the spread they took over their own cost of funds, and concluded that the pricing was excessive relative to the regulations and to the Fair Practices Code.

Alongside pricing, RBI cited a set of conduct and prudential concerns: non-adherence to the guidelines on assessment of the borrower's household income and of existing and proposed monthly repayment obligations; deviations in income recognition and asset classification (IRAC) norms; the conduct of a gold loan portfolio; and gaps in the disclosure of interest rates and fees and in the governance of outsourced activities. RBI framed all of these as material supervisory concerns, and did not characterise them as criminal conduct.

Two of the four, Asirvad and Arohan, are microfinance institutions (NBFC-MFIs); the other two, DMI Finance and Navi Finserv, are investment and credit companies and among the larger app-based consumer lenders in India. That mix is the point of the action: it reached both traditional microfinance and digital-first lending under the same pricing lens, without treating either as more than a supervisory matter.

Procedurally, RBI's supervisory teams examine a regulated entity, raise concerns, and, where they consider it warranted, direct a business restriction to halt the conduct while the entity fixes it. That is what happened here. RBI restricted fresh lending from 21 October 2024; the companies engaged with the regulator and revised their pricing and processes; and RBI reviewed and then removed the restriction for each in turn. The Digital Lending framework RBI put in place from September 2022 sits behind this: it requires transparent, direct pricing between the borrower and the regulated lender.

Who Lost Money

This is not a matter with an identified victim class, and it is important to say so plainly. RBI acted pre-emptively on pricing and conduct. It did not make any finding of loss or of wrongdoing against the companies, and no monetary figure attaches to the action.

The constituency the measure was meant to protect is prospective borrowers of these lenders, microfinance customers and app-based consumer borrowers, who would otherwise have taken new loans at the all-in prices RBI judged excessive. During the restriction, existing customers continued to be serviced, so the immediate effect fell on new lending rather than on loans already outstanding.

For the companies, the cost was commercial and reputational: a pause on new business for a period, and the work of remediating pricing and processes to RBI's satisfaction. Because all four are large, solvent, regulated entities, and because the restrictions were lifted after remediation, the episode is better read as a supervisory correction than as a solvency or integrity event.

Where It Stands Now

The restrictions are no longer in force. RBI lifted the cease-and-desist direction on all four companies within about three months of imposing it, the first removal in December 2024 and the remaining three by early 2025, after each satisfied the regulator that it had remediated the pricing and conduct concerns. Each lifting was itself an RBI order; a business restriction of this kind is designed to be removed once the regulator is satisfied, and that is exactly what happened here.

All four companies have resumed normal lending. There is no ongoing bar, no penalty outstanding, and no finding of wrongdoing against any of them. Because the action was supervisory in nature, the matter began and ended entirely within RBI's supervisory process, without any court proceeding.

As of the date of this review, the position is that the October 2024 direction was fully lifted following remediation, and the reporting here reflects that current position rather than the restriction as it stood when first imposed.

What It Means

This matter shows a regulator policing price and conduct rather than alleging crime. RBI's lever was not a fine but a temporary bar on new lending, a tool aimed squarely at changing behaviour quickly, and calibrated to be lifted once the behaviour changes. The speed of the reversal, within about three months, is part of the design, not a weakness in it.

For borrowers, the practical lesson is about the all-in cost of a loan. The figure that matters is not the headline interest rate alone but the effective annualised cost once fees and charges are added; RBI's focus on the weighted average lending rate and the spread over cost of funds is, in plain terms, a focus on whether the total price is fair. Before borrowing, it is worth asking a lender for the annual percentage rate and the full schedule of fees in writing, and checking that the lender is an RBI-regulated entity.

The episode also shows where the accountability path for pricing and conduct complaints runs: through the regulator's supervisory process, and not through a court. A restriction is not the end of the story; remediation and restoration are part of the same process. Oquilia's enforcement archive follows regulatory action of this kind, including NFRA's audit-misconduct order in the Coffee Day matter and SEBI's action on research-analyst registrations.

FAQ

Were these NBFCs found to have done anything criminal?

No. RBI's action was a supervisory direction on pricing and conduct, not a finding of any offence, and no individual was named. RBI cited material supervisory concerns about the companies' lending rates, the spread over their cost of funds, and adherence to the Fair Practices Code. It was not a criminal proceeding and it carried no penalty.

What exactly did RBI order?

By order dated 17 October 2024, RBI directed Asirvad Micro Finance, Arohan Financial Services, DMI Finance and Navi Finserv to stop sanctioning and disbursing new loans from the close of business on 21 October 2024. Existing customers could continue to be serviced during the restriction.

Are the restrictions still in place?

No. RBI lifted the restrictions on all four companies within about three months, between December 2024 and early 2025, after each remediated the concerns RBI had raised. All four have resumed normal lending, and no bar remains.

Why did RBI act on pricing?

Per its press release, RBI found the companies' weighted average lending rate and their interest spread over cost of funds to be excessive and not in adherence with the regulations, alongside concerns on household-income assessment, income recognition and asset classification, disclosure of rates and fees, and outsourcing.

What should a borrower take from this?

Focus on the all-in cost of a loan, not the headline rate. Ask the lender for the annual percentage rate and the complete schedule of fees and charges in writing before borrowing, and confirm that the lender is a regulated entity. RBI's Fair Practices Code exists to require transparent and non-excessive pricing.

Where can I read the official order?

RBI's press release "Action against select NBFCs including NBFCs-MFIs" dated 17 October 2024 is published on rbi.org.in.

This report is based on the Reserve Bank of India press release "Action against select NBFCs including NBFCs-MFIs" dated 17 October 2024 and RBI's subsequent orders lifting the restrictions on the four companies, reviewed on 30 July 2026.