NBFCs' recovery to be hit after RBI action against M&M Financial Services

Moreover, as lenders will not deploy their own staff for such activity, their operation costs may go up, said experts

With a majority of non-banking financial companies (NBFCs) relying on outsourced agents for loan recovery, the banking regulator’s tough stance on Mahindra & Mahindra Financial Services (MMFSL) could impact recovery for the entire sector in the near-to-medium term.

Moreover, as lenders will now deploy their own staff for such activity, their operation costs may go up, said experts.

Till the time the entities realign their collection model, the repossession of assets could slow down. For a quarter or so, the non-performing assets (NPAs) could remain elevated.

Last week, MMFSL said Reserve Bank of India’s (RBI’s) action would not materially impact