Mahindra barred from outsourcing loan recovery, after third party agent crushed woman under tractor

The RBI has said that while Mahindra cannot use third party recovery agents, it can continue repossession activity through its own employees.

FPJ Web DeskUpdated: Friday, September 23, 2022, 01:31 PM IST
article-image

Everything from a car to housing to smartphones is available on EMI with a few taps, but as loans get easier to access, harassment by recovery agents has also become common. This year alone, reports of sexual harassment by recovery agents and people committing suicide because of their intimidation even prompted RBI to step in and release a circular. Auto giant Mahindra also faced flak when a third party recovery agent ran over a pregnant woman while driving away in a tractor financed by the firm. Following the incident, India’s banking regulator has barred Mahindra from using third-party personnel for recovery.

Tragic consequences

The incident from Jharkhand took place on September 15, and involved a specially-abled farmer who had secured a loan from Mahindra Finance for a tractor. The company had outsourced recovery to an agent who was forcibly taking away the vehicle for non-payment despite the farmer’s pleas. When his 27-year-old pregnant daughter tried to chase the tractor, she was crushed to death behind its wheel.

Mahindra Finance acknowledged that the vehicle was financed by it, and issued a statement calling the incident a human tragedy and promised to look into the practice of third-party recovery. The group’s Chairman Anand Mahindra also expressed condolences for the family for its loss via Twitter. The RBI was expected to impose punitive fines on Mahindra for violating norms while hiring recovery agents.

Things worse than they appear

Although Mahindra is now banned from outsourcing loan recovery until further orders from the RBI, it can continue to carry out repossession of assets through its own employees. The incident took place barely a month after RBI’s circular, which required non-banking financial companies (NBFCs) to publish details of their recovery agencies on websites. In November last year, it had also told NBFCs that non-performing assets (NPAs) can’t be placed in the standard asset category until all dues including compound interest are paid.

Over the past four months, Kurar police station in Mumbai has registered 11 complaints against harassment by recovery agents. This year alone, a couple and a student among others had committed suicide after being threatened by loan recovery agents. A woman in Guntur was even blackmailed using morphed obscene images by third party agents.

(To receive our E-paper on whatsapp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

RECENT STORIES

Loan limit for aviation sector raised to ₹1500 under ECLG scheme to boost post-pandemic recovery

Loan limit for aviation sector raised to ₹1500 under ECLG scheme to boost post-pandemic recovery

Gujarat government announces incentives for industries to strengthen its development pitch during...

Gujarat government announces incentives for industries to strengthen its development pitch during...

Property developer Rustomjee Group launches initiative aimed at community building

Property developer Rustomjee Group launches initiative aimed at community building

Here are Indian cough syrups that possibly caused deaths of 66 children, under investigation by WHO

Here are Indian cough syrups that possibly caused deaths of 66 children, under investigation by WHO

India denied entry into JPMorgan’s influential bond index, misses out on $30 billion opportunity

India denied entry into JPMorgan’s influential bond index, misses out on $30 billion opportunity