RBI orders M&M Financial to stop loan recovery via third party

The shadow lending arm of the Mahindra Group can continue recovery or repossession activities through its own employees, the RBI said in a statement

The Reserve Bank of India on Thursday directed Mahindra and Mahindra Financial Services (MMFSL) to stop using third-party services for loan recovery until further orders, citing "material supervisory concerns".

"The Reserve Bank of India has today, in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, directed MMFSL, Mumbai, to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements, till further orders," said the regulator in a statement.

However, the said NBFC may continue to carry out recovery or repossession activities, through its own employees. This action is based on certain