The central bank cited certain material supervisory concerns with regard to the management of its outsourcing activities as the reason being its directive.
However, the non-banking financial company (NBFC) has been permitted to carry out recovery or repossession activities through its own employees.
RBI’s action comes days after reports of a 27-year-old pregnant woman being crushed to death trying to stop a loan recovery agent, working on behalf of MMFSL, from seizing her father’s tractor over loan dues.
“We will investigate this incident from all aspects and will also undertake an examination of the practice of using third-party collection agencies that has been in existence,” Mahindra Group CEO Anish Shah had said in a statement on Twitter last Friday.
(With inputs from Reuters)