Mahindra Finance: RBI lifts curbs on loan recovery via third-party services

Reserve Bank of India has lifted restrictions on Mahindra & Mahindra Financial Services Limited on loan recovery via third-party services, said the company on Wednesday.

On September 22, 2022 RBI had directed Mahindra & Mahindra Financial Services Limited to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements, till further orders. 

"Based on the submissions made by the Company and its commitment to strengthen its recovery practices and outsourcing arrangements, tighten the process of onboarding third party agents and strengthen accountability framework as per its Board approved action plan, the RBI, vide its letter dated 4th January 2023, has informed the Company of its decision to lift the aforementioned restrictions imposed on the Company with immediate effect," said the Mahindra Group firm on Wednesday. 

RBI had taken action after a 27-year-old pregnant woman was crushed to death trying to stop a loan recovery agent, working on behalf of MMFSL, from seizing her father's tractor over loan dues in Jharkhand's Hazaribagh.

"We will investigate this incident from all aspects and will also undertake an examination of the practice of using third-party collection agencies that has been in existence," Mahindra Group CEO Anish Shah had said then.

On Wednesday, Mahindra finance stock closed flat at Rs 233.90 while the broader markets fell over 1%.