RBI directs Mahindra Finance to cease carrying outsourced recovery activities

27 Sep 2022 , 01:32 AM

Mahindra Mahindra Financial Services announced that the Reserve Bank of India RBI has directed the Company to immediately cease carrying out any recovery or repossession activity through outsourcing arrangements till further orders However the Company may continue to carry out recovery or repossession activities through its own employees In the normal course of its business the Company repossesses about 4000 to 5000 vehicles per month using the third-party agencies and its own employees The Company expects this number to go down temporarily by about 3000 to 4000 per month as the Company implements the RBI order with immediate effect The Company has not outsourced any collection activities in its vehicle finance business to any third-party agencies and therefore the Company does not expect any impact on the collections in this business s on 30th June 2022 the count of contracts under Stage 3 was 135 Lac and the Company carried a sufficient provision of 58Percentage on these assets inclusive of 100Percentage provision on contracts with age of 18 months The vehicles that are repossessed are mostly classified under Stage 3 and therefore this temporary halt to repossession activity using the third-party agencies is not expected to have any material impact either on the financials or on Net Stage 3