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RBI Orders 4 NBFCs to Stop Disbursing Loans

 The RBI directed four shadow banks, Asirvad Micro Finance Ltd, Arohan Financial Services Ltd, DMI Finance, and Navi Finserv from disbursing loans after Oct. 21 as they were charging very high interest

  1. Action based on material supervisory concerns observed in the pricing policy of these companies, RBI said:

·       Their weighted average lending rate and the interest spread charged over their cost of funds were found to be excessive and did not adhere to RBI regulations

·       “In addition to usurious pricing, these NBFCs were variously found to be in non-adherence with the regulatory guidelines on assessment of household income and consideration of existing / proposed monthly repayment obligations,” the central bank said

Mutual Fund Exposure:

  • Out of the 4 NBFCs flagged by RBI, MF industry only has an exposure to DMI Finance worth INR 245 Crs with the commercial papers maturing in Dec’24.

Issuer Name

Scheme Name

Category

Market Value
(Rs. Crs.)

(%) of
NAV

Instrument

Maturity Date

Rating

DMI Finance Pvt. Ltd.

Baroda BNP Paribas Liquid Fund

Liquid Fund

162.24

1.68

CP

13-Dec-24

A1+

Baroda BNP Paribas Money Market Fund

Money Market Fund

9.83

3.57

CP

13-Dec-24

A1+

Baroda BNP Paribas Ultra Short Duration Fund

Ultra Short Duration Fund

24.56

2.35

CP

16-Dec-24

A1+

UTI Ultra Short Duration Fund

Ultra Short Duration Fund

49.04

1.85

CP

24-Dec-24

A1+

What now?

  • These business restrictions do not preclude these companies from servicing their existing customers and carrying out collection and recovery processes in accordance with the extant regulatory guidelines.

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