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During tough times, instead of offering support, many NBFCs resort to harsh and inhumane methods to recover loans. These practices can be very stressful and damaging for borrowers, especially when they are already facing financial difficulties. While it is true that NBFCs face significant challenges in recovering loans and the associated interest, resorting to such extreme measures is not the right solution. More humane and supportive approaches are needed to help borrowers repay their loans without adding to their burdens.
Non-Banking Financial Companies (NBFCs) sometimes employ recovery agents who use illegal and inhuman practices to recover personal loans from borrowers. These agents often resort to persistent and intimidating phone calls, abusive language, and even sending vulgar pictures. They reach out to borrowers' bosses, harass family members or colleagues, and make false threats of legal action or arrest. Such actions cause borrowers to experience severe anxiety and depression, and in some tragic cases, they are driven to suicide. These practices are not in line with the Reserve Bank of India (RBI) guidelines, which emphasise humane and lawful recovery methods.
Recovery agents also engage in other forms of harassment, such as visiting the debtor’s home or workplace without permission, humiliating them in front of others, and pressuring them to sell their homes or take on more credit. They may use multiple debt collectors, send fake official-looking letters, and coerce borrowers to pay off the debt in full or increase their EMIs beyond what is affordable. These actions not only violate ethical standards but also contribute to a toxic environment for borrowers, undermining their mental health and overall well-being. It is crucial for lending institutions to adhere to RBI guidelines and adopt fair recovery practices to protect borrowers' rights and dignity.
In one such case, an NBFC borrower lost his job, so he defaulted on his EMI. As a result, the NBFC recovery agents started harassing him in a way that violated his dignity. This behaviour led to the destruction of his support system, including his elderly parents, as the recovery agents bombarded them with threatening calls and defamed his loved ones. Ultimately, these recovery agents destroyed his world and his self-respect.
After this horrible situation, the market's perception of NBFCs diminished. If NBFCs do not follow the Reserve Bank of India (RBI) guidelines, which strictly adhere to fair code practices in the loan recovery process, they will also lose new customers. This is because they are inflicting psychological torture on borrowers through threatening calls, harassment, and disrespecting family members with abusive language.
As a conciliation and arbitration firm, PrivateCourt does not support inhuman practices. We strictly adhere to the guidelines under the Arbitration and Conciliation Act in our entire process. PrivateCourt believes that no one should have to go through tough times alone, as every individual relies on the support of their family members. Destroying families and the mental peace of borrowers by NBFCs, whose only goal is to recover debt, is not a good practice.
PrivateCourt believes that united legal action must be taken against NBFCs that do not follow Reserve Bank of India (RBI) guidelines. PrivateCourt ensures that NBFCs adhere to ethical practices, not just for compliance with laws and regulations, but to build a sustainable, trustworthy, and profitable business model. Treating customers with respect and fairness ultimately benefits the company, the customers, and the broader community.
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