From high-end phones to air tickets and cars, everything can be paid for via installations now and banks are lining up to provide loans via incessant calls. But in case one isn’t able to repay the easily available loan in time, telecallers are replaced by recovery agents who’ll go to any extent to repossess the assets. Harassment by these third party agents has led to grave consequences, including suicides, sexual harassment and a fatal accident this year. One such incident has led to a 14 per cent crash in Mahindra & Mahindra’s stock prices.
Another ‘terrible tragedy’
The latest case to make the headlines was that of a recovery agent representing Mahindra Finance, running over a pregnant woman with a tractor. This was followed by the RBI’s decision to bar the company from outsourcing loan recovery to such agents. The ban that came despite the firm promising to look into the matter and Chairman Anand Mahindra calling it a terrible tragedy, has hurt its position on the stock market.
On September 15 a loan recovery agent in Jharkhand was trying to drive off with a tractor that was bought by a specially-abled farmer through a loan from Mahindra Finance. When the agent paid no heed to his pleas, the farmer’s 27-year-old pregnant daughter tried to chase and stop the tractor. She ended up being crushed to death under the wheel of the tractor as the agent refused to stop.
Regulator decides to act
After Mahindra CEO Anish Shah issued a statement saying that the company would examine the system of using third party agents, Anand Mahindra expressed solidarity with the family. But that wasn’t enough to convince the RBI, which banned Mahindra from hiring such agents. Just a month before the incident, RBI had also released a circular requiring firms to list such third party agencies on their websites, after increasing complaints about harassment.
Mahindra Finance issued a statement that its recovery of vehicles after this order will be going down from 4000 to 5000 a month, to as low as 3000 a month.
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