In other words, the company was instructed not to use the services of an outside loan collection agency.
However, the RBI said MMFSL may continue to conduct recovery or repossession activities through its own employees.
“The RBI, in the exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, has instructed Mahindra & Mahindra Financial Services Ltd. (MMFSL), Mumbai to immediately cease trading performing recovery or repossession activity through outsourcing agreements, until further orders.However, the said NBFC may continue to carry out recovery or repossession activities, through its own employees,” it said.
“This action is based on certain material oversight issues observed in the said NBFC, regarding the management of its outsourcing activities,” it further said.
The central bank’s designation came after a pregnant woman in Jharkhand died after allegedly being mowed under the wheels of a tractor by a finance company repairman in the state’s Hazaribagh district, according to media reports.
According to reports, Hazaribagh police told media that the officials of the financial company did not inform the local police station before going to the victim’s residence to recover the tractor.
Mahindra Group said in a statement, citing general manager and CEO Anish Shah, that it will investigate the incident from all aspects.
It further said the company will also investigate the practice of using third-party debt collection agencies.
The company said it is assisting the family of the deceased at this time of grief.
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