Reserve Bank cancels registrations of 5 NBFCs

The Reserve Bank has cancelled the certificate of registration issued to five Non-Banking Financial Companies (NBFCs) — UMB Securities and Anashri Finvest (both Bengaluru-based), Chadha Finance (New Delhi), Alexcy Tracon (Kolkata) and Jhuria Financial Services (Guwahati) — due to irregular lending practices.

The certificates of the abovementioned NBFCs have been cancelled on account of violation of RBI’s guidelines on outsourcing and Fair Practices Code in their digital lending operations undertaken through third party apps; this was considered detrimental to public interest, said the Central bank’s statement.

“These companies were also not complying with the extant regulations pertaining to charging of excessive interest and had resorted to undue harassment of customers for loan recovery purposes,” RBI said.

As such, the above companies shall not transact the business of a Non-Banking Financial Institution (NBFI), as defined in clause (a) of Section 45-I of the RBI Act, 1934, according to the Central bank.