India’s central bank on Thursday ordered Mahindra & Mahindra Financial Services to immediately stop loan recoveries via external agents till further orders.
The directive comes days after external loan recovery agents of Mahindra Finance allegedly crushed a 27-year-old pregnant woman in Hazaribagh district in Jharkhand to death under a tractor. The agent was was forcibly taking the vehicle away, financed by the company, for non-payment of dues, a senior police official had told PTI.
“This action is based on certain material supervisory concerns observed in the said NBFC, with regard to the management of its outsourcing activities,” the Reserve Bank of India said today.
The shadow lender can however continue to carry out recovery or repossession activities via its own employees.
Soon after the incident came to light, Anish Shah, the managing director and chief executive officer at Mahinda Group, assured support to the authorities will be provided during the investigation.
“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,” he said.