Central bank taboo last week Mahindra & Mahindra Financial Services A 27-year-old pregnant woman from Jharkhand’s Hazaribagh district was allegedly crushed to death under a tractor operated by recovery agents involving third party agents for loan recovery.
Referring to the action taken against Mahindra Finance, reserve Bank of India Deputy Governor MK Jain told reporters that it is not aimed at taking away the right of regulated entities to recover their rights. “What we expect is that it should be on the right side of the law,” he said at a post-policy press conference.
He said the central bank does not expect the action to have an impact on regulated entities and clarified that the action was only against a specific entity.
Jain said the guidelines to be followed by regulated entities while engaging in outsourcing of activities were already issued under the Fair Practices Code, and the RBI is expected to adopt board-approved policies to monitor and supervise the same. will come with
Deputy Governor Rajeshwar Rao said a comprehensive circular on financial services outsourcing and responsibilities of recovery agents was issued in August.
Additionally, in the case of microfinance institutions, the responsibilities of recovery agents have been specified in the master instructions, he said.
“Both these directives (August circular and MFI master directive) will be integrated and we are coming out with a master directive on guidelines for outsourcing and conduct by financial recovery agencies. That too will come out soon,” he added.