RBI directs Mahindra Finance to stop recovery of loans through third parties

Tags: Economy/Finance

The Reserve Bank of India (RBI) in an order issued on 22 September 2022 directing Mahindra & Mahindra Financial Services Ltd. (MMFSL), Mumbai, to immediately halt recovery of loans and repossession activity through third-party agents.

IMPORTANT FACTS -

• Mahindra & Mahindra Financial Services Ltd is a Non-Banking Financial Company (NBFC) promoted by Mahindra and Mahindra group.
• This direction was issued by RBI under section 45L (1) (b) of the Reserve Bank of India Act, 1934.
• The regulatory action comes in the wake of an incident in Hazaribagh, Jharkhand, where a recovery agent working on behalf of the non-banking financial company (NBFC) allegedly ran over a pregnant woman during the confiscation of her family’s tractor.
• RBI has issued a code for the NBFC, mandating that lenders must not resort to undue harassment, persistently bother borrowers at odd hours or use muscle power for recovery of loans.

Important Points to remember :

• Banks in India are regulated by RBI under the Banking Regulation Act 1949.
• NBFC are regulated by RBI under the Reserve Bank of India act 1934.