The Reserve Bank of India (RBI) has barred Bajaj Finance from lending under two of its loan products — Insta EMI and eCOM — with immediate effect.

The regulator has taken this action against the country’s largest consumer financier due to violations of certain provisions of the digital-loan guidelines.

The RBI has pointed out that the violations include the non-issuance of key fact statements (KFS) to the borrowers under these two lending products. There were also deficiencies in the KFS issued in respect of other digital loans sanctioned by the company.

“These supervisory restrictions will be reviewed upon the rectification of the said deficiencies to the satisfaction of the RBI,” the regulator said on Wednesday.

In response to the RBI action, Bajaj Finance said it will undertake a detailed review of the KFS for the loans booked under the two lending products and implement requisite corrective actions to the satisfaction of the regulator at the earliest.

"We do not expect this action to have a material financial impact on the company. We re-affirm our commitment to rectify observations of the RBI in KFS and comply with RBI directions at the soonest," Bajaj Finance said.

The Insta EMI card is a virtual card which comes with a pre-approved limit of up to Rs 2 lakh, featuring a repayment tenure of up to 60 months. The card can be used to shop for over one million products offered by the company at ‘no-cost EMI’. 

The RBI has taken a series of actions to curtail malpractices in digital lending. Last month, the regulator banned state-owned Bank of Baroda (BoB) from onboarding any new customers onto its 'bob World' mobile application.

Earlier in December 2020, the RBI banned HDFC Bank from issuing new credit cards and introducing digital products after multiple systemic glitches were reported. The ban was lifted in August 2021.