The board of leading NBFC Bajaj Finance has received a 'letter of displeasure' from the banking regulator RBI over lapses in its co-branded credit cards business, stating that the arrangements are exposing customers to risks, CNBC Awaaz reported on April 3, citing people familiar with the development.
The RBI expressed its displeasure over the fact the Bajaj Finance has failed to maintain internal controls and processes for clients, and the NBFC needs to adhere to compliance, while ensuring that there is no conflict of interest for the selection of external auditors in this regard. Bajaj Finance also needs to be undertake data security measures as well as IT and cyber security controls, RBI's letter added.
The Reserve Bank in its letter has expressed discontent over Bajaj Finance not being proactive in identifying operational gaps in its co-branded credit card business.
The Reserve Bank cited a previous letter, dated January 31, to which Bajaj Finance had responded on February 22, in its latest communication, and said that the NBFC has not proactively identified gaps, and had failed to prevent data leakage and fraudulent activities.
Shares of Bajaj Finance are near the day's low, down close to 2% in early trade on April 3.
The RBI had lifted curbs on Bajaj Finance on May 2024, allowing it to resume sanction and disbursal of loans for two products - eCOM and online digital ‘Insta EMI Card’ - after it imposed restrictions in 2023 owing to non-adherence of digital lending guidelines. In November last year, lender RBL Bank and Bajaj Finance had ceased their co-branded credit card partnership.
Recently, the Reserve Bank of India (RBI) Governor Sanjay Malhotra had urged non-banking financial companies (NBFCs) to further their contribution towards financial inclusion as well as customer protection.
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