The Reserve Bank of India (RBI) on Thursday directed Mahindra & Mahindra Services Ltd, Mumbai (MMFSL), to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements, till further orders.
In other words, the company was directed not to use services of any outside agency for loan recovery purpose.
The RBI, however, said that MMFSL may continue to carry out recovery or repossession activities through its own employees.
“The RBI in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, has directed Mahindra & Mahindra Financial Services Ltd. (MMFSL), Mumbai, to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements, till further orders. However, the said NBFC may continue to carry out recovery or repossession activities, through its own employees,” it said.
“This action is based on certain material supervisory concerns observed in the said NBFC, with regard to the management of its outsourcing activities,” it said further.
The direction from the central bank came after a pregnant woman in Jharkhand died after she was allegedly mowed down under the wheels of a tractor by a recovery agent of the finance company in the state’s Hazaribagh district, according to media reports.
As per reports, Hazaribagh police told media persons that the officials of the finance company did not inform the local police station before going to the residence of the victim for the recovery of the tractor.
Mahindra Group, in a statement quoting its Managing Director and CEO Anish Shah, said that it will investigate the incident from all aspects.
It further said that the company will also examine the practise of using third-party collection agencies.
The company said that it stands with the deceased person’s family in this moment of grief.