RBI Directed Mahindra & Mahindra Financial Services To Cease Recovery Through Outsourcing Arrangements

The Reserve Bank of India (RBI) issued a press release on 22.09.2022., wherein directing Mahindra & Mahindra Financial Services Ltd. (MMFSL), Mumbai, to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements, till further orders of the court. Therefore, the MMFSL may continue to carry out recovery or repossession activities, through its own employees. Further, it was stated that the action was based on certain material supervisory concerns observed in MMFSL, with regard to the management of its outsourcing activities.
Background of the Case
Mahindra & Mahindra Financial Services Ltd. (MMFSL) is a part of Mahindra & Mahindra group of companies and is at present led by Mr. Anand Mahindra. Thus, MMFSL is a Non-Banking Financial Company (NBFC), which provides Vehicle and Asset Finance to rural Indians and finances the purchase of new and pre-owned tractors, construction equipment, commercial vehicles and two wheelers.
Recently, it is surfaced in the news that a pregnant woman had died after she was allegedly mowed down under the wheels of a tractor by a recovery agent of MMFSL in Hazaribagh, Jharkhand. However, a loan has been taken by the deceased woman’s father from MMFSL and the outsourced recovery agents were attempting to recover the same while the incident had taken place.