While financial obligations must be honored, recovery efforts must adhere to legal and ethical boundaries.
With the rise in unsecured lending in India, many borrowers face aggressive and unethical recovery practices by lenders and third-party collection agencies. While financial obligations must be honored, recovery efforts must adhere to legal and ethical boundaries. Unfortunately, many recovery agents resort to harassment, violating borrowers' rights and causing mental distress.
Lawyer Panel, a unit of Eresolution Consultancy Services Pvt Ltd, is India's leading dispute resolution company protecting borrowers against various forms of recovery harassment and providing them legal protections against this kind of unethical practice. They have helped more than 30,000 borrowers by protecting them against recovery harassment and negotiating with their lenders to resolve their debt problems. In a recent conversation, their Director, Mr.Anurag Mehra, highlighted some ways in which recovery agents harass borrowers and how to fight back against such harassment:
1. Privacy Violations: Contacting Family & Friends
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One of the most intrusive recovery tactics is the unauthorized access and misuse of a borrower’s contact list. Many digital lending apps request access to a user’s phone contacts, and in the event of a missed payment, recovery agents begin contacting family, friends, and even colleagues. This practice constitutes a serious privacy violation and is not only unethical but also illegal under data protection laws.
2. Home Visits Without Intimation
Recovery agents are required to follow RBI guidelines, which mandate prior intimation before visiting a borrower’s residence. However, many agents show up unannounced, causing distress to the borrower and their family. Such unsolicited visits, especially when done with coercion, amount to harassment and can be legally challenged.
3. Office Visits Without Intimation
Similar to home visits, some agents attempt to pressure borrowers by visiting their workplace without prior notice. This is not only against RBI guidelines but also causes reputational damage and unnecessary embarrassment for the borrower. Such tactics can be legally contested as a violation of privacy and professional dignity.
4. Call Bombing: Excessive and Repeated Calls
RBI guidelines strictly prohibit excessive calling, yet many recovery agents engage in “call bombing” – repeatedly calling the borrower within short intervals, sometimes using multiple numbers. This practice is mentally exhausting and is a clear form of harassment. Borrowers facing this issue can report it to the concerned authorities, including the RBI and law enforcement.
5. Use of Abusive & Threatening Language
Threatening or abusive communication is one of the most common forms of recovery harassment. Recovery agents, in many cases, use derogatory language, threats of physical harm, or legal repercussions to intimidate borrowers. However, such behavior is against the RBI’s Fair Practices Code and can be reported to the lender, RBI, or the police.
6. Early Morning & Late-Night Calls
The RBI has specific guidelines on permissible call timings for debt recovery agents, typically restricting calls to 8:00 AM to 7:00 PM. Despite this, many borrowers receive calls early in the morning or late at night, disrupting their personal lives and causing undue stress. Such practices should be reported to regulatory bodies.
7. Fake FIRs, Legal Notices & Court Orders
Some unscrupulous recovery agents attempt to intimidate borrowers by issuing fake FIRs, legal notices, or court orders. These documents often lack authenticity and are used solely as a fear tactic. Borrowers should verify any legal communication with their own legal counsel before taking action.
8. Impersonation as Police Officers or Lawyers
Some agents go to the extent of impersonating law enforcement officers or lawyers to expert psychological pressure on borrowers. Such impersonation is a criminal offense and can be reported to the police. Borrowers should always verify the credentials of any individual claiming to represent a legal or enforcement authority.
9. Defamation & Blackmail
In extreme cases, recovery agents resort to defamation and blackmail, threatening to publish the borrower's financial details on social media or inform their employers. Such tactics are illegal under defamation and cybercrime laws, and strict legal action can be taken against those involved.
Legal Recourse for Borrowers
Borrowers facing recovery harassment have several options:
- File a complaint with the RBI: The RBI has strict guidelines against unfair recovery practices and you can file a complaint with RBI with evidence of harassment.
- Approach the police: Harassment, threats, and defamation are criminal offenses that can be reported to law enforcement. File a complaint with your local police station in case you face these issues.
- Seek legal aid: Borrowers can approach legal professionals to challenge illegal recovery actions. Many situations can be resolved faster through alternate dispute resolution (ADR) mechanisms instead of going to the court.
- Report to the lender: Officially informing the lender about harassment by their recovery agents can sometimes result in corrective actions. File a complaint with the PNO (Principal Nodal Officer) of the bank or NBFC in such matters.
While lenders have the right to recover dues, they must follow ethical and legal practices. Borrowers, on the other hand, should be aware of their rights and take action against any form of harassment. By enforcing fair recovery practices, the financial ecosystem can become more transparent and borrower-friendly.