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

The Reserve Bank of India (RBI) on Thursday barred Mahindra & Mahindra Financial Services from conducting recovery or repossession activities through third parties until further notice. However, the company may carry out the activity through its own employees.

In a statement, RBI said: “Maindra & Mahindra Financial Services Ltd. (MMFSL), Mumbai, instructed to immediately cease conducting recovery or repossession activities through outsourcing agreements, 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 oversight issues observed in the said NBFC, regarding the management of its outsourcing activities.

From Mahindra UVs to tractors to non-Mahindra products, the company has diversified into a financial services company offering a range of financial solutions tailored to the underserved customer in under-penetrated rural markets.

The Mahindra Group-backed NBFC’s product portfolio consists of vehicle financing, including financing of passenger cars, commercial vehicles, tractors, commercial vehicles, construction equipment; and used vehicles and SME financing, including project financing, equipment financing, working capital financing and invoice discounting services to SMEs. The company also distributes mutual funds, fixed deposits and personal loans tailored to its unique customer base.

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