By Malvika Gurung
Investing.com — Shares of the rural non-banking financial company Mahindra and Mahindra (NS:) Financial Services (NS:) tanked 13% to Rs 194.7 apiece at the time of writing, after nosediving about 14% on Friday.
The stock crashed after the Reserve Bank of India directed the company to put an immediate stop on loan recoveries or repossession activities via outsourcing agents until further orders.
As per the central bank’s order dated Sept 22, M&M Financial Services can continue the recovery of loans and its repossession activities through employees.
The supervisory order was released after a 27-year-old pregnant woman was allegedly crushed to death under a tractor driven by an external loan recovery agent of Mahindra Finance in Hazaribagh, Jharkhand on Sept 15, 2022.
“This action is based on certain material supervisory concerns observed in the said NBFC, with regard to the management of its outsourcing activities,” stated RBI on Thursday.
In response to the banking regulator’s restriction, the NBFC said that it would not have a significant impact either on its collections or the financials.
“In the normal course of its business, the company repossesses about 4,000 to 5,000 vehicles per month, using third-party agencies and its own employees. We expect this number to go down temporarily by about 3,000-4,000 per month,” M&M Financial Services said in an exchange filing.