The Reserve Bank of India (RBI) has directed Mahindra & Mahindra Financial Services (Mahindra Finance) to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements, till further orders. However, the Company may continue to carry out recovery or repossession activities, through its own employees. This action is based on certain material supervisory concerns observed in the company, with regard to the management of its outsourcing activities.
In the normal course of its business, the company repossesses about 4000 to 5000 vehicles per month, using the third-party agencies and its own employees. The company expects this number to go down temporarily by about 3000 to 4000 per month, as the company implements the RBI order with immediate effect. The company has not outsourced any collection activities in its vehicle finance business to any third-party agencies and therefore, the company does not expect any impact on the collections in this business.
Mahindra & Mahindra Financial Services is one of India’s leading non-banking finance companies.