Quick answer
When EMIs slip, regulated lenders may contact you, explain the overdue amount, send reminders and use recovery agents, subject to RBI conduct rules (RBI/2022-23/108, 12 August 2022). They may also send legal notices or start civil or contractual recovery where the agreement allows it.
Practices that commonly cause harm — and that you can document and complain about — include harassment outside allowed calling hours, public shame, false arrest threats, asking for payment into a personal account, or pressuring you to accept a settlement without a written offer from the lender. This article is general. It does not name any bank or NBFC.
What are lawful recovery practices?
- Reminders by call, SMS, email or letter during permitted hours.
- A visit by an authorised person who shows ID and the lender’s authority letter. See home and workplace visits.
- A written statement of account, a demand notice, or other legal paper the contract and the law allow.
- Considering restructuring or a compromise settlement under the lender’s board-approved policy (RBI’s 8 June 2023 framework). Approval is the lender’s decision.
Which recovery practices cross the line?
RBI’s August 2022 circular tells regulated entities that they and their agents must not intimidate, publicly humiliate, intrude on the privacy of family members, referees and friends, make threatening or anonymous calls, persistently call to harass, call about overdue loans before 8:00 AM or after 7:00 PM, or make false or misleading claims. The lender remains responsible for outsourced agents.
For the difference in everyday examples, see legal recovery vs harassment.
Which settlement or payment practices should you treat as unsafe?
- A verbal or WhatsApp “final amount” with no letter on the lender’s stationery or official email.
- A request to pay an agent, a personal UPI ID, or a new company that is not your lender.
- Pressure to decide “today only” without time to read the terms.
- A promise that settlement will improve your CIBIL score. Settlement does not improve CIBIL; the account is usually reported as settled, not closed.
- Anyone claiming to be RBI-approved as a settlement consultant. RBI does not approve settlement consultancies.
Use the settlement letter checklist and how to check a settlement company before you pay.
What can you do if you see a malpractice?
- Save call logs, messages, names and times.
- Write to the lender’s grievance redressal officer and ask for a written reply.
- If needed after the usual wait, complain at cms.rbi.org.in where the Ombudsman scheme applies.
- For threats of violence, contact the police. For online extortion or fake payment links, cybercrime.gov.in or 1930 may also apply.
Sources
Frequently Asked Questions
Is a reminder call a malpractice?
Not by itself. A polite reminder about an overdue EMI during allowed hours is generally allowed. Abuse, shame or false threats are not.
Can I name the lender publicly?
This guide does not encourage public shaming either. Use the official grievance and Ombudsman channels, which create a record.
Does every NBFC follow the same RBI circular?
Applicability depends on the type of regulated entity and the product (for example microfinance has separate rules). Check which licence your lender holds if you are unsure.
If I record a call, can I use it in a complaint?
Keep whatever evidence you obtained lawfully. Attach it to a written complaint to the lender. A lawyer can advise on recordings in your state.