Recent regulatory actions taken by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) concerning Paytm Payments Bank, IIFL Finance, and JM Financial Ltd have stirred the markets. However, Anish Shah, the Group CEO and Managing Director of Mahindra & Mahindra Ltd, views these actions as ultimately beneficial for the financial services industry.
In an interview, Shah expressed the group’s perspective that the recent interventions by the RBI will have a positive impact on the financial services sector. He emphasized the importance of running financial services businesses with robust controls and risk frameworks.
Last week, the RBI imposed restrictions on IIFL Finance’s gold loan operations and barred JM Financial Products from financing against shares and debentures due to identified deficiencies. Additionally, on January 31, the RBI imposed significant business restrictions on Paytm Payments Bank.
Shah justified the regulatory interventions by emphasizing the necessity for strong processes, controls, and risk frameworks. He stated that the RBI has consistently demanded these standards, which align with the Mahindra Group’s principles of prudent risk management.
Regarding potential opportunities arising from the regulatory actions, Shah noted the group’s cautious approach, avoiding lending to high-risk segments.
Regarding Mahindra & Mahindra Financial Services Ltd, Shah highlighted the significant transformation the business has undergone, addressing concerns such as volatility and non-performing assets (NPAs). He underscored the positive trajectory of the business, particularly in technology integration, expecting further strengthening in the coming years.
For the quarter ending December 31, the financial services business witnessed a 25.5% year-over-year growth in its loan book, with a decrease in gross Stage-3 non-performing assets to 4% of the loan book.
Mahindra & Mahindra Financial Services remains a key financier for M&M’s vehicles, financing a substantial portion of utility vehicle and tractor sales according to India Ratings & Research.
