Mahindra Finance faces RBI’s tough action days after Hazaribagh mishap

Image Source : PTI/FILE Mahindra Finance faces RBI’s tough action

Mahindra Finance News: The Reserve Bank of India (RBI) has barred Mahindra Finance from using services of third-party agents for loan recovery. The action comes days after a pregnant woman was crushed to death after recovery agents forcibly took away a tractor in Jharkhand’s Hazaribagh. 

“The Reserve Bank of India has today, in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, 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,” the central bank said in a statement.

“This action is based on certain material supervisory concerns observed in the said NBFC, with regard to the management of its outsourcing activities,” it added. 

Shares of Mahindra & Mahindra Financial Services Limited (MMFSL) tanked 10 per cent on Friday following RBI’s action. This is the biggest fall in Mahindra Finance share price since March 2020.

What happened in Hazaribagh

A 27-year-old pregnant woman in Hazaribag district was crushed to death under a tractor allegedly by a recovery agent when he was forcibly taking the vehicle away for non-payment of dues.

The incident took place on September 15 and the victim, a daughter of a farmer, Mithilesh Mehta of Bariyanath under Ichak Police Station, was three months pregnant.

District superintendent of police Manoj Ratan Chothe said a case of murder has been registered against four people, including the recovery agent and manager of the private finance company.

The managing director and chief executive officer of Mahindra group, Anish Shah has in a statement said, “We are deeply saddened and disturbed by the Hazaribagh incident. We stand with the family in this moment of grief.”

He assured to investigate the incident from all aspects and also undertake an examination of the practice of using third party collection agencies that has been in existence.

(With inputs from agencies)

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