BENGALURU (Reuters) -India's Mahindra and Mahindra Financial Services (MMFSL) said on Friday its monthly vehicle recovery would temporarily fall by about 75%, a day after the country's central bank directed the company to stop using third-party services for repossessions.
The company's shares tumbled as much as 10% to 201.35 rupees as of 0414 GMT, their biggest intra-day percentage slide in 17 months.
The Reserve Bank of India late on Thursday directed the company to stop using third-party services for recoveries until further orders, citing "material supervisory concerns."
Recent media reports said a 27-year-old pregnant woman had been crushed to death trying to stop a loan recovery agent, working on behalf of MMFSL, from seizing her father's tractor over loan dues.
MMFSL said on Friday it expects the number of repossessed vehicles to temporarily go down by about 3,000 to 4,000 vehicles per month, from the 4,000 to 5,000 it repossesses in the normal course of business, implying a drop of more than 75% at the mid-point of those ranges.
The halt on vehicle recovery by the third-party agencies is not expected to have any material impact on its financials, the company said.
"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," it said in a statement.
A company spokesman declined to clarify further, instead directing queries to a statement from MMFSL's vice chairman and managing director, Ramesh Iyer.
"In light of the recent tragic incident, we have stopped third party repossessions and will further examine whether and how third party agents will be used in the future," Iyer said in a statement on Thursday.
(Reporting by Navamya Ganesh Acharya and Nivedita Bhattacharjee in Bengaluru; Editing by Savio D'Souza)