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Bengaluru: The Reserve Bank of India (RBI) on Thursday, September 22 directed Mahindra and Mahindra Financial Services (MMFSL) to stop using third-party services for loan recovery until further orders, citing “material supervisory concerns”.
RBI’s action comes days after reports of a 27-year-old pregnant woman being crushed to death trying to stop a loan recovery agent, working on behalf of MMFSL, from seizing her father’s tractor over loan dues.
“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,” Mahindra Group CEO Anish Shah had said in a statement on Twitter last Friday.
The shadow lending arm of the Mahindra Group can continue recovery or repossession activities through its own employees, the RBI said in a statement.
MMFSL did not immediately respond to a Reuters request for comment on RBI’s directive.