Following RBI’s directive barring Mahindra & Mahindra Financial Services Ltd (MMFSL) from engaging a third party for recoveries in cases of loan default, the company said it has stopped repossessions through third-party agents.
In a late night communication on Thursday (September 22), Mahindra Finance said it has a detailed policy in place for compliance of third parties with regard to repossession of vehicles. “In light of the recent tragic incident, we have stopped third-party repossessions and will further examine whether and how third-party agents will be used in the future,” Ramesh Iyer, vice chairman and managing director, Mahindra Finance, said in the statement.
Also read: Federal Bank dismisses reports of merger with Kotak Mahindra
Following the death of a 27-year-old pregnant woman in Jharkhand’s Hazaribagh district, who was allegedly crushed to death under the wheels of a tractor by recovery agents last week, RBI on Thursday barred MMFSL from carrying out any recovery or repossession activity through third party agents with immediate effect till further orders. The RBI said the non-banking finance company (NBFC) may continue to carry out recovery or repossession activities through its own employees. This action is based on certain material supervisory concerns observed in the said NBFC with regard to the management of its outsourcing activities, the RBI added.
Also read: Jobless growth a concern, govt must act, says Anand Mahindra
In connection with the death of the woman, the police had arrested one Roshan, an employee of Team Lease, a firm hired by Mahindra Finance. Mahindra Group chief executive officer and managing director Anish Shah had condoled the death and assured that the incident would be investigated from all aspects.