Loan harassment in India often starts subtly and escalates over time, especially when borrowers begin missing repayments. Routine follow-up calls can quickly escalate into persistent and aggressive tactics, as reported across the country, reflecting the challenges within India’s expanding credit landscape.
Anurag Mehra, the founder of Expert Panel, a prominent debt and loan dispute resolution platform in India, highlighted the prevalence of such practices. Despite strict guidelines from the Reserve Bank of India (RBI), borrowers face intimidation and threats regularly due to weak enforcement on the ground.
Mehra’s team encounters borrowers from diverse income groups and regions, including gig economy workers with fluctuating incomes and middle-income salaried individuals in urban areas facing rising living costs. He shared a concerning case where a person earning Rs 30,000 a month managed to secure loans totaling Rs 20 lakh from multiple lenders, illustrating the lax checks by some modern lending platforms.
The rise of lifestyle inflation and multiple credit obligations, including buy-now-pay-later schemes, exacerbates financial burdens for households, leading to a cycle of debt. Instant loan apps exploit this scenario by offering quick loans with minimal documentation, often operating in regulatory gray areas and charging exorbitant interest rates.
The recovery side of India’s credit ecosystem faces severe criticism for coercive practices, excessive charges, and public shaming. Tragically, instances of borrower suicides linked to harassment by unscrupulous lenders have been reported in various states, underscoring the dire consequences of predatory lending practices.
Despite RBI’s guidelines on digital lending, regulatory loopholes persist, allowing smaller lenders and unregulated apps to operate unchecked. The redress system for borrowers is struggling, with a significant increase in complaints related to digital lending harassment, indicating the urgent need for stronger enforcement and consumer protection measures.
Borrowers often default due to common reasons such as job loss, high EMI burdens, medical emergencies, or unforeseen expenses. Many borrowers seek loans for essential needs like healthcare, education, or debt consolidation, highlighting the crucial role credit plays in bridging financial gaps for individuals.
Expert Panel has been instrumental in providing debt relief to thousands of borrowers, emphasizing the importance of educating borrowers about their rights and available support systems. While India’s credit market continues to expand, there is a pressing need to align regulations with effective enforcement to protect borrowers from predatory practices and ensure a more transparent and dignified lending environment.