The Reserve Bank of India (RBI) has raised concerns about Bajaj Finance’s management of its co-branded credit card business, citing data security and operational control issues.
According to CNBC Awaaz, the RBI sent a ‘letter of displeasure’ to Bajaj Finance, highlighting its failure to identify risks and prevent fraud. This follows a previous letter from January 31, to which Bajaj Finance responded on February 22. However, the RBI noted that the company had not taken enough steps to address the operational issues.
The RBI criticized Bajaj Finance’s internal controls, saying they exposed customers to security risks. The letter also stressed the need for improved compliance, especially in selecting external auditors to avoid conflicts of interest. The RBI has directed Bajaj Finance to strengthen its IT and cybersecurity systems to safeguard customer data.
As a result, Bajaj Finance’s shares dropped nearly 2% in early trading on April 3. This follows a setback in 2023, when the RBI imposed restrictions on Bajaj Finance for failing to follow digital lending guidelines. These restrictions were lifted in May 2024, allowing Bajaj Finance to resume loans for products like eCOM and online ‘Insta EMI Cards’. The latest criticism suggests ongoing concerns about the company’s compliance practices.
Furthermore, Bajaj Finances ended its co-branded credit card partnership with RBL Bank in November, raising doubts about its ability to manage its credit card business. The RBI’s warning increases scrutiny on the company’s governance and risk management.
RBI Governor Sanjay Malhotra has called on non-banking financial companies (NBFCs) to focus on financial inclusion while ensuring customer protection. The letter to Bajaj Finance emphasizes the RBI’s commitment to enforcing compliance and protecting consumers from data breaches and fraud.
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