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M&M Financial stock down by 14% today

Stock price down after RBI directs it to not use third party recovery agents

September 23, 2022 11:12 IST | India Infoline News Service
In Friday's intraday trade, shares of Mahindra & Mahindra (M&M) Financial Services fell 14% to Rs192.05 after the Reserve Bank of India (RBI) ordered the business to immediately stop all recovery or repossession efforts via an outsource until further instructions.
The stock was down 11% at Rs200 a share at 9:55 am, while the Nifty 50 index was down 0.78%. A total of 20 million shares were traded on the NSE and BSE. "The non-banking financing company (NBFC) in question operates its outsourced business in a manner that has raised some serious supervisory concerns, which are the basis for the action. However, the NBFC may continue to use its own people in recovery or repossession attempts "explained RBI.
The company claims that as part of routine business operations, they reclaim 4,000 to 5,000 vehicles every month employing both internal staff members and other groups. However, as they promptly execute the RBI regulation, the company expects a temporary fall in this amount to between 3,000 and 4,000 each month.

The management went on to say that "the firm has not outsourced any collection activities in its vehicle finance business to any third-party agencies and, as a consequence, the company does not envisage any impact on the collections in this sector." As a result, according to analysts at ICICI Securities, the RBI's decision may have an immediate effect on the company's recovery process and negatively impact market sentiment.
Despite Friday's sharp decline, M&M Financial outperformed the market during the previous six months, increasing 25%. During this time, the Nifty 50 index went up by 1%. On September 15, 2022, the stock had previously risen to a 52-week high of Rs235 per share.

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