Mumbai: In an unscheduled meeting on Friday, Navi Finerv founder Sachin Bansal and management told lenders that the company, which the Reserve Bank of India (RBI) barred from disbursing loans the previous day, was well-equipped to handle any situation arising from this until March 2026.
On Thursday, the RBI banned Navi and three other non-bank lenders from disbursing loans, saying they were charging excessive rates. Earlier today (21 October), Reuters reported that the company had withdrawn its ₹100-crore bond issuance after the RBI ban.
In a Powerpoint presentation on Friday, Navi’s management said the company’s debt repayments worth ₹3,027 crore that are due over the next six months will be taken care of through collections from customers to the tune of ₹4,000 crore. The company also has a strong liquidity buffer of ₹1,500 crore and unencumbered cash of ₹1,450 crore to handle all immediate repayments, they added.
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Saurabh Rungta, managing director and chief investment officer at Avendus Wealth Management, said, “The biggest issue for these NBFCs is that lenders may stop giving them loans or borrowing costs may see a big spike. One of the companies in this list has a very strong promoter and is sitting on adequate liquidity, so we don’t suspect it will result in an existential crisis. It may at best hurt profitability or growth this year.”
As of 31 March 204, 44 lenders including State Bank of India, ICICI bank, Axis Bank had given loans to Navi, and borrowings from lenders stood at ₹6,444.1 crore against ₹5,762.6 crore a year earlier.
Navi’s core business is giving out personal loans of up to ₹20 lakh, with interest rates ranging from 9.9% to 45% per annum. As of 30 June, its assets under management (AUM) stood at ₹11,725 crore, with digital personal loans comprising ₹10,439 crore, according to Crisil. However, earnings were subdued because of higher credit costs and operational expenses. The lender made an operating profit of ₹79 crore and interest income of ₹502 crore in the June quarter.
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Shobhit Agarwal, head of lending at Navi Finserv, said, “At Navi Finserv, we are committed to conducting business operations with the highest standards of compliance, customer service, and transparency. Following the instructions from the Reserve Bank of India, we are committed to addressing the highlighted aspects and are hopeful to do this at the earliest. The company also has sufficient liquidity and capitalisation, and we are fully committed to meeting our obligations, ensuring that we will not default — even by a day — on payments to our valued lenders and stakeholders.”
Existing loans unaffected
Last Thursday the RBI temporarily barred Navi Finserv, DMI Finance, Asirvad Micro Finance Ltd (backed by Manappuram Finance), and Arohan Financial Services Ltd from disbursing new loans from close of business on 21 October.
The RBI clarified that the restrictions only apply to new loans, and that the companies could continue servicing existing customers and proceed with collections under regulatory guidelines.
The central bank’s crackdown followed months of heightened scrutiny. In recent speeches and policy updates, RBI governor Shaktikanta Das issued repeated warnings to non-bank financiers and micro-lenders about usurious interest rates.
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“This action is based on material supervisory concerns observed in the pricing policy of these companies in terms of their weighted average lending rate (WALR) and the interest spread charged over their cost of funds, which are found to be excessive and not in adherence with the regulations,” the RBI said in a statement.
The regulator said the lenders failed to follow the Fair Practices Code, violated rules around income assessments, and disregarded loan repayment capacity norms for microfinance borrowers. Inspections also uncovered concerns related to evergreening of loans, asset classification, gold loan portfolio practices, and non-compliance with disclosure mandates, it said. Additionally, some had outsourced core financial services, compounding regulatory risks, the RBI added.
