Mahindra Finance Shares Drop 14% Following Order from RBI

The Reserve Bank of India barred Mahindra & Mahindra Financial Services Limited from using third-party recovery services . The scrip dropped to a low of Rs 192.05 on the intra-day against its previous days close of Rs 223.75 .

Mumbai (Maharashtra): On Friday, Mahindra & Mahindra Financial Services Limited's stock dropped by more than 14 percent, a day after being barred from using third-party recovery services by the Reserve Bank of India (RBI).The scrip dropped to a low of Rs 192.05 on the intra-day against its previous days close of Rs 223.75, according to the RBI.However, the said NBFC would continue to carry out recovery or repossession operations through its own employees, according to Mahindra & Mahindra Financial Services Limited.As the Company implements the RBI order immediately, the company expects this number to decrease by around 3000 to 4000 per month.

In a regulatory filing to the stock exchanges, Mahindra & Mahindra Financial Services Limited said that the count of contracts under Stage 3 was 1.35 Lac as at June 2022, and that the Company had a sufficient provision of 58% on these assets (inclusive of a 100 percent provision on contracts with an age of 18 months).It therefore appears that this temporary suspension of repossession activities by third-party vendors is not likely to have a major effect on the financials or Net Stage 3.