“RBI Revokes Margdarshak Financial’s License Over Payment Defaults, High NPAs”

The Reserve Bank of India (RBI) has revoked the registration of Margdarshak Financial Services Ltd, a company based in Lucknow, due to its failure to repay loans and maintain the required financial standards. As of March 31, 2021, the company did not meet the minimum regulatory requirements, such as having a net owned fund of ₹5 crore and a capital adequacy ratio of 15% needed for NBFC-MFIs (Non-Banking Financial Company – Microfinance Institution).

According to a statutory audit, Margdarshak Financial Services was facing severe cash flow problems and defaulted on repaying ₹49.27 crore to its lenders. The audit also revealed that the company had significant financial losses of ₹187 crore and high net non-performing assets (NPAs) amounting to ₹82.37 crore, which raised doubts about its ability to continue operating.

The audit report for the fiscal year ending March 31, 2021, was delayed and finalized only in October 2021, nearly seven months late. The RBI noted that the company also delayed submitting required reports and did not cooperate with the central bank’s inspection by failing to provide necessary information and documents.

Additionally, the RBI found significant cash flow mismatches in various time frames and exceeded the allowed limits. Due to these issues, the central bank decided to cancel Margdarshak Financial Services’ license.

In related news, the RBI has imposed penalties on two other companies for not complying with rules related to peer-to-peer lending and digital lending platforms. A fine of ₹1.99 crore was imposed on Innofin Solutions Pvt Ltd, also known as “LenDen Club,” and ₹1.92 crore on NDX P2P Pvt Ltd, known as “LiquiLoans.”