Short answer
Not being able to pay an unsecured loan is generally a civil matter. Missing EMIs because you ran out of money is not, by itself, a reason for arrest. But some situations can lead to criminal cases, so do not ignore notices.
When criminal law can come in
- A cheque you gave bounces for lack of funds. This can lead to a complaint under Section 138 of the Negotiable Instruments Act, 1881. Read Section 138 notice reply.
- An ECS/NACH (electronic) debit bounces. Section 25 of the Payment and Settlement Systems Act, 2007 can apply. Read ECS bounce notice.
- Fraud is alleged, for example fake documents at the time of the loan.
What lenders usually do
Send reminders, notices, refer to arbitration, or file a civil suit. They may also send recovery agents, who must follow RBI's rules.
Arrest ki dhamki mili? If someone threatens you with arrest
Ask for written notice. Fake threats of police or court action are not allowed under RBI rules for recovery. Note it and complain to the lender. For a real notice or case, get legal advice (see the note below).
Quick answer
Not being able to repay a personal loan is generally a civil matter, and missing EMIs because money ran out is not by itself a reason for arrest. Criminal law can come in when a cheque or auto-debit you gave bounces, or when fraud is alleged. Never ignore a real notice; report fake arrest threats.
Real situations
Example: say an agent says "FIR ho jayegi, kal police aayegi" because you missed three EMIs. No cheque bounced and no fraud is alleged. That is a pressure tactic, and false statements by agents breach RBI's recovery rules. [S3] Note the call and complain to the lender.
Example: say you received a Section 138 notice by speed post. This is real and time-bound; act within the 15 days and speak to a lawyer of your choice.
Example: say a lawyer's demand notice mentions "civil and criminal action". Read what is actually alleged; most loan default notices lead to civil recovery or arbitration.
Get help
Got a notice or a threat? See our legal notice help · 7979789458
Sources
Frequently Asked Questions
Can I be arrested for missing personal loan EMIs?
Not being able to pay an unsecured loan is generally a civil matter. Missing EMIs because you ran out of money is not, by itself, a reason for arrest.
When can a criminal case come in?
For example when a cheque you gave bounces (Section 138, NI Act), an ECS/NACH debit bounces (Section 25, PSS Act), or fraud is alleged.