RBI Cancels Zavron Finance Registration Over Lending Irregularities

The Reserve Bank of India (RBI) revoked Zavron Finance's registration due to irregular lending practices. Zavron violated guidelines by outsourcing key financial operations, failing due diligence on Lending Service Providers, and not providing loan documents in vernacular languages. It is barred from conducting non-banking financial activities.

The Reserve Bank of India (RBI) has taken significant action against Zavron Finance, a Nagpur-based company, by revoking its certificate of registration. The central bank cited irregularities in the firm's lending practices as the primary reason for this decision.

Specifically, Zavron Finance was found to have breached RBI guidelines concerning the outsourcing of essential financial functions. These include credit appraisal and loan disbursement. Furthermore, Zavron outsourced key operations, such as fixing interest rates and the KYC verification process, which are supposed to be conducted independently by the firm.

In addition to these violations, Zavron failed to conduct proper due diligence on its Lending Service Providers (LSPs), a critical component in ensuring the competence and security of their operations. As a result, Zavron Finance has now been barred from engaging in any non-banking financial activities.

(With inputs from agencies.)