RBI Bars M&M Finance From Using External Recovery Agents Post Hazaribagh Mishap
On Friday, the share price of Mahindra and Mahindra Financial Services declined over 10 percent in the morning trade.
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On Friday, the share price of Mahindra and Mahindra Financial Services declined over 10 percent in the morning trade. This happened a day after the Reserve Bank of India blocked the company from outsourcing loan recovery or repossession activity.
Meanwhile, RBI has proposed Mahindra Financial Services stop using third-party services for loan recovery. Previously a 27-year-old pregnant woman was allegedly crushed to death by a tractor. The tractor was however forcibly driven away by the company’s recovery agent in Jharkhand’s Hazaribagh.
The non-banking finance company, however, can continue to carry out recovery or repossession activities, through its employees, the RBI said in a statement. The action is based on substantial supervisory concerns observed about the management of its outsourcing activities.
Police arrested one, namely Roshan, an employee of Team Lease, a firm hired by Mahindra Finance. Anish Shah, the managing director, and chief executive officer at Mahinda Group, ensured support will be provided during the investigation soon after he got to know about the accident.
The company also said that RBI’s regulation would not have a crucial effect on the collections. The interim stop to repossession activity using the third-party agencies was not anticipated to have any material impact either on the financials.
Previously, Four people in a WagonR had gone to recover a tractor from a farmer due to nonpayment of loan installments amounting to 1.2 lakhs. The farmer had taken a loan from Mahindra Finance for the tractor and was unable to pay the recent. However, the recovery agents started taking away the tractor forcibly.
Further, the family has claimed that the area manager of Mahindra Finance and the recovery agents purposely ran over the daughter of the farmer when she tried to stop them from taking the tractor. The woman, aged 25-27 years, was pregnant and sustained injuries when she was run over by the WagonR.
She later succumbed to her injuries in a hospital in Ranchi. It is also said that the woman got injured when the accused started leaving in panic after a crowd gathered at the spot of the dispute.
