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RBI bars Mahindra Finance from carrying out recovery through third-party days after pregnant woman's death

RBI bars Mahindra Finance from carrying out recovery through third-party days after pregnant woman's death

Mahindra Finance may continue to carry out recovery or repossession activities through its own employees, the bank regulator said.

RBI bars Mahindra Finance from carrying out recovery through third party RBI bars Mahindra Finance from carrying out recovery through third party

The Reserve Bank of India (RBI) on Thursday barred finance company Mahindra Finance from carrying out any recovery or repossession activity through outsourcing arrangements. However, the company may continue to carry out recovery activities through its own employees, the bank regulator said.

"This action is based on certain material supervisory concerns observed in the said NBFC (Non-Banking Financial Company), with regard to the management of its outsourcing activities," the RBI said. 

The RBI action comes just days after a pregnant woman, Monika Devi, was crushed to death under the wheels of a tractor being forcibly taken away by recovery agents in the Hazaribagh district of Jharkhand. 

Later, a 26-year-old man, Roshan Singh, was arrested by the Hazaribagh Police. Hazaribagh SP Manoj Ratan Chothe told PTI said Singh is the third party vendor engaged by the finance company. "Roshan is among the four named in the FIR filed after the death of Monika Devi," Ichak police station officer-in-charge Dhananjay Singh said.

According to the agency report, a family member of the deceased claimed that the recovery agents and the manager of Mahindra Finance there had become angry when her father Mithilesh Mehta had sought to see proof of their identity. The family member also said that the agents sent Mithilesh a message over the phone to repay the loan of Rs 1.30 lakh.

The recovery agents allegedly insisted that Mithilesh must pay the entire amount or they would take away the tractor. Mithilesh had reportedly offered to clear Rs 1.20 lakh immediately. However, the agents did not agree and went to seize the tractor. Monika Devi had rushed to the spot with her father to stop the agents, but she was crushed under its wheels.