RBI bars Mahindra Financial Services from loan recovery through third party agents

Mumbai, Sep 23: Reserve Bank on Thursday barred Mahindra & Mahindra Financial Services Ltd (MMFSL) from carrying out any recovery or repossession activity through third party agents with immediate effect till further orders.

The RBI's decision follows the death of a pregnant woman (27) in Jharkhand's Hazaribagh district who was allegedly crushed to death under the wheels of a tractor by recovery agents last week.

However, the MMFSL, a non-banking finance company, may continue to carry out recovery or repossession activities, through its own employees, the central bank said in a statement.

"The Reserve Bank of India has today...directed Mahindra & Mahindra Financial Services Ltd. (MMFSL), Mumbai, to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements," the statement said.

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.

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.