Four non-bank finance companies, including city-based microfinance company Arohan Financial Services, were asked to cease and desist from sanction and disbursal of loans by the Reserve Bank of India, effective from the close of October 21, 2024.

The other three companies are Chennai-based Asirvad Micro Finance Limited, New Delhi-based DMI Finance Private Limited and Bangalore- based Navi Finserv Limited, with the later two being in the category of investment and credit companies (NBFC-ICC).

The regulator in a statement on Thursday said that its action is based on material supervisory concerns in the pricing policy of these companies in terms of their weighted average lending rates and interest spread charged over their cost of funds, which are found to be excessive and also non adherence to regulations laid down under various master circulars. They are also found to be in non conformity with the provisions laid down under the fair practices code issued by the RBI.

Manoj Nambiar, MD of Arohan Financial Services, declined to comment when reached out by this newspaper on Thursday evening.

A spokesperson from Flipkart co-founder led Sachin Bansal’s Navi Finserv said that they are reviewing the directions from the RBI and will work with the regulator to address all concerns.

“This matter has been immediately brought to the notice of our board and a meeting has been convened urgently to take immediate action. The board has reiterated its unwavering commitment to implement RBI’s direction in letter and spirit and monitor the corrective action in a time bound plan,” Asirvad Microfinance said in a statement.

Asirvad Microfinance, which is a subsidiary of Manappuram Finance, has filed a draft prospectus for its proposed listing on the bourses.