RBI directs Mahindra Finance to stop outsourcing its recovery activities through agents

The Reserve Bank of India (RBI) on Thursday barred Mahindra & Mahindra Financial Services from carrying out recovery or repossession activity through third-party until further notice. However, the company is allowed to carry out the activity through its own employees.

In a statement, RBI said, “directed Mahindra & Mahindra Financial Services Ltd. (MMFSL), Mumbai, to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements, until further orders.”

“However, the said NBFC may continue to carry out recovery or repossession activities, through its own employees,” it added.

RBI said, this action is based on certain material supervisory concerns observed in the said NBFC, with regard to the management of its outsourcing activities.

From Mahindra UVs to tractors to non-Mahindra products, the company has diversified into a financial services provider with a whole suite of financial solutions tailored to the under-served customer in under-penetrated rural markets.

The Mahindra Group-backed NBFC’s product portfolio consists of vehicle finance, which includes financing of passenger vehicles, utility vehicles, tractors, commercial vehicles, construction equipment; and pre-owned vehicles and SME finance, which includes project finance, equipment finance, working capital finance and bill discounting services to SMEs. The company also undertakes mutual fund distribution, fixed deposits and personal loans tailor-made to suit its unique customer set.

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