RBI Lifts Ban On Asirvad Micro Finance Limited, DMI Finance Private Limited - What Does This Mean?

The Reserve Bank of India, on Wednesday, lifted the restrictions imposed on in exercise of Asirvad Micro Finance Limited, DMI Finance Private Limited. Earlier this month, the central bank lifted the restrictions imposed on Navi Finserv Pvt Ltd and Arohan Financial Services Limited.

RBI Ban On Asirvad Micro Finance Limited And DMI Finance Private Limited - What's The Matter?

In October last year, RBI had asked Asirvad Micro Finance Limited, DMI Finance Private Limited to cease and desist from sanction and disbursal of loans, effective from the close of business as of October 21, 2024. While banning the two entities, RBI had observed supervisory concerns about the pricing practices of the two firms. 

Among others, the RBI had observed that the Weighted Average Lending Rate (WALR), the overall interest rate offered by the banking institutions were ‘excessive’.

Subsequently, the above-mentioned companies initiated remedial action and submitted their various compliances to the Reserve Bank.

Why RBI Lifted Ban On Asirvad Micro Finance Limited And DMI Finance Private Limited

“Now, having satisfied itself based on companies’ submissions, and in view of their adoption of revamped processes, systems, and the companies’ commitment to ensure adherence to the Regulatory Guidelines on an ongoing basis, especially for ensuring fairness in the loan pricing, the Reserve Bank has decided to lift the afore-mentioned restrictions placed on both, Asirvad Micro Finance Limited and DMI Finance Private Limited, with immediate effect,” RBI added.

The business restrictions that were imposed on two other NBFCs vide Reserve Bank’s orders dated October 17, 2024, Navi Finserv Pvt Ltd and Arohan Financial Services Limited have been lifted vide orders dated December 2, 2024 and January 3, 2025, respectively.

The lifting of restrictions will necessarily mean that the two finance companies can resume their lending activities with immediate effect.