The Reserve Bank of India (RBI) on Wednesday said it has cancelled the Certificate of Registration (CoR) of five Non-Banking Financial Companies (NBFCs) due to irregular lending practices. The NBFCs whose Certificate of Registrations have been cancelled include UMB Securities Limited, Anashri Finvest Limited, Chadha Finance Private Limited (now known as Chadha Finance Limited), Alexcy Tracon Pvt Ltd and Jhuria Financial Services Private Limited.
“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,” the RBI said in a statement. The CoR of the abovementioned NBFCs have been cancelled on account of violation of RBI guidelines on outsourcing and Fair Practices Code in their digital lending operations undertaken through third-party apps which was considered detrimental to the public interest, the RBI said.
“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,” the central bank added.