RBI directs M&M Financial to stop using third party recovery agents right away

The Reserve Bank of India (RBI) on Thursday said it has directed Mahindra & Mahindra Financial Services Ltd (MMFSL) to immediately stop any recovery or repossession operations through outsourcing arrangements, till further orders.

However, RBI said the NBFC may continue with recovery or repossession activities through its own employees.

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

The RBI action comes after a 27-year-old pregnant woman was crushed to death under the wheels of a tractor being forcibly driven away by the recovery agent of MMFSL in Hazaribagh district of Jharkhand.

The victim, the daughter of a differently-abled farmer Mithilesh Mehta of Bariyanath under Ichak Police Station, was three months pregnant.

Superintendent of Police Manoj Ratan Chothe said a case of murder has been registered against four persons, including the recovery agent and manager of the private finance company.

A special investigation team headed by the DSP (HQ) Rajeev Kumar was formed to arrest those involved, the SP said.

Mehta had told the police that he had received a message on his mobile phone on Thursday (September 22) from Mahindra Finance Company — from which he had taken a loan for buying the tractor — insisting that he should pay his outstanding dues of Rs 1.3 lakh immediately.

The company had also threatened to take away the tractor, which was parked at a nearby petrol pump on NH-33 unless the money was paid. When Mehta rushed to the spot after receiving the message he found the recovery agent has taken possession of the tractor and was driving away with it, the SP said.

He ran after the moving tractor and told the recovery agent that he was willing to pay Rs 1.2 lakh immediately but the man insisted that the entire amount should be cleared.

As the recovery agent refused to listen to the man’s pleas and kept driving the tractor, his pregnant daughter, who had reached the spot, ran after it and was crushed to death under its wheels, the SP said.