Shares of Mahindra & Mahindra (M&M) Financial Services plunged 14% to Rs 192.05 in Friday’s intra-day trade, after the Reserve Bank of India (RBI) directed the company to immediately stop using third-party services for loan recovery or repossession activities till further orders.

The stock ended 13.45% lower at Rs 193.65 per share, as compared to a 1.73% decline in the Sensex.

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“The action is based on certain material supervisory concerns observed in the said non-banking finance company (NBFC), with regard to the management of its outsourcing activities. However, the NBFC may continue to carry out recovery or repossession activities, through its own employees,” the RBI said.

The company said that they repossess around 4,000 to 5,000 vehicles per month in the normal course of business, using third-party agencies and its own employees. The company expects this number to go down temporarily by about 3000 to 4000 vehicles per month, as they implement the RBI order with immediate effect.

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“The company has not outsourced any collection activities in its vehicle finance business to any third-party agencies and therefore, the company does not expect any impact on the collections in this business,” Mahindra & Mahindra Financial Services Limited said.

The RBI action comes after a 27-year-old pregnant woman was allegedly crushed to death under the wheels of a tractor which was forcibly being driven away by a recovery agent of a finance company in Jharkhand’s Hazaribagh, according to a PTI report.

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A clarification by the Mahindra Group confirmed that the vehicle was indeed financed by Mahindra Finance and the loan was passed under the name of the victim’s differently-abled father Mithilesh Mehta.

Superintendent of Police Manoj Ratan Chothe said a case of murder has been registered against four individuals, including the recovery agent and manager of the private finance company.

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According to analysts at ICICI Securities, the RBI’s order could impact the recovery process of the company in the short term and steer investor sentiments in a negative direction.

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Despite Friday’s sharp decline, M&M Financial outperformed the market in the past six months surging 25%. In comparison, the Sensex rose 1%, during the same period. Earlier, the stock had hit a 52-week high of Rs 235 per share on September 15, 2022.