Missing a loan equated monthly installment (EMI) can be stressful.
For many borrowers, the pressure becomes even worse when recovery agents start calling repeatedly, contacting family members, or making threats.
While lenders have the right to recover dues, experts say there is a clear line between legitimate recovery efforts and harassment.
The Reserve Bank of India (RBI) has laid down rules governing how banks, non-banking financial companies (NBFCs), and their recovery agents can interact with borrowers. Understanding these rights can help consumers deal with difficult situations without feeling intimidated.
Harassment complaints remain common
Borrowers facing repayment difficulties often complain about threatening calls, rude behaviour, repeated follow-ups, and recovery agents reaching out to family members, colleagues, or neighbours.
“Today, the most frequent complaints from borrowers relate to threatening calls, rude behaviour, repeated follow-ups at odd hours, and recovery agents contacting family members, colleagues, or even neighbours,” said Prateek Jha, advocate, Supreme Court of India. “While banks have the right to recover dues, intimidation, public humiliation, or harassment is simply not acceptable.”
Prateek Kumar, partner at Khaitan & Co, said complaints also include public humiliation at residential or workplace premises, intrusive conduct affecting family members, threatening messages on social media, and attempts to forcibly take possession of vehicles or property.
According to Kumar, such actions violate RBI’s responsible business conduct directions as well as judicial rulings that place responsibility on banks for the behaviour of their recovery agents.
What recovery agents cannot do
Under RBI guidelines, recovery agents must follow certain basic standards while dealing with borrowers.
They cannot:
• Call or visit at unreasonable hours
• Use abusive, threatening, or intimidating language
• Contact neighbours, friends, employers, or extended family members for recovery
• Publicly shame borrowers
• Threaten arrest or police action without legal basis
• Take possession of property without following due legal procedures
Experts emphasise that loan default is generally a civil matter. Recovery agents themselves do not have the authority to arrest borrowers.
“If a recovery agent threatens arrest or starts contacting family members, employers, or neighbours, the borrower should immediately save call recordings, messages, and screenshots, and note down dates and details of every interaction,” said Jha.
How documentation can help
Legal experts say maintaining evidence is often the difference between a successful complaint and a difficult dispute.
Jha cited a case involving a borrower facing financial difficulties who received repeated threatening calls while family members were also contacted. The borrower preserved records of calls and messages and later presented them through legal channels.
“Once this evidence was presented, the harassment stopped and the lender was directed to follow the prescribed guidelines,” he said.
Kumar shared a similar example involving a loan-against-property borrower who fell behind on installments after financial hardship. Recovery agents allegedly made repeated visits to the borrower’s residence, publicly humiliated the individual, and contacted friends and relatives.
The borrower recorded videos of the incidents, filed complaints with the bank and RBI, and highlighted the matter publicly. According to Kumar, the recovery agents eventually stopped their visits and calls outside permissible hours, while the bank later agreed to modify the repayment schedule.
What borrowers should do if harassment continues
Experts recommend the following steps:
-
Document everything -
Keep call recordings, screenshots, messages, emails, dates, names, and phone numbers. -
Complain to the bank first -
Write to the bank’s grievance redressal officer or nodal officer and describe the alleged violations. -
Escalate to RBI
Borrowers can file complaints through RBI’s Complaint Management System if the issue remains unresolved.
Approach the police if necessary
Where threats, intimidation, assault, or other criminal acts are involved, borrowers can lodge a police complaint or FIR.
Kumar noted that borrowers may have remedies under both regulatory and criminal law frameworks depending on the nature of the misconduct.
Don’t stop communicating with the lender
One of the biggest mistakes borrowers make is cutting off communication altogether.
“The biggest mistake is avoiding communication altogether. Many people stop answering calls because they are stressed or scared, but that often makes matters worse,” said Jha. He advised borrowers facing genuine financial hardship to engage with lenders, discuss restructuring or settlement options, and keep communication in writing wherever possible.
Kumar echoed the view, saying borrowers should deal directly with the bank rather than disappear or change mobile numbers. They should also carefully review loan documents, seek legal guidance where required, and avoid making payments under coercion.
Know your rights
Financial stress can happen because of job loss, illness, business setbacks, or unexpected expenses. Experts say borrowers should remember that lenders have legal recovery mechanisms available to them, but harassment is not one of them.
“Borrowers should know that loan recovery is a legal process, but harassment is not. Financial stress does not take away a person’’s right to dignity, privacy and fair treatment,” said Jha.
For borrowers facing aggressive recovery tactics, knowing their rights, preserving evidence, and raising timely complaints can often prevent the situation from escalating further.
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