Mahindra Finance share price tanks 10% after RBI action - what investors should know

Mahindra Finance Share Price: Mahindra & Mahindra Financial Services Limited (MMFSL), NSE: M&MFIN, share price on Friday hit a lower circuit as it crashed 10 per cent. Mahindra Finance shares were locked in the lower circuit at Rs 201.35. However, the circuit was revised by the exchanges and the stock continued its downward journey. At 10:20, Mahindra Finance share price was down by 12 per cent on the NSE.

This is the biggest fall in Mahindra Finance share price since March 2020, when lockdown was imposed in the country to arrest the spread of Covid-19, bringing the wheels of the economy to a grinding halt.

The freefall in Mahindra Finance share price comes in the backdrop of RBI's action against the Mahindra Group company. The central bank had on Thursday barred the company from engaging a third party for recoveries in cases of loan default. Following the death of a 27-year-old pregnant woman in Jharkhand's Hazaribagh district, who was allegedly crushed to death under the wheels of a tractor by recovery agents last week, the RBI barred MMFSL from carrying out any recovery or repossession activity through third party agents with immediate effect till further orders.

The RBI said the non-banking finance company (NBFC) may continue to carry out recovery or repossession activities through its own employees.

This action was based on certain material supervisory concerns observed in the said NBFC with regard to the management of its outsourcing activities, the RBI said.

In connection with the death of the woman, the police had arrested one Roshan, an employee of Team Lease, a firm hired by Mahindra Finance.