Default on an unsecured loan is a civil matter, not a criminal one. Recovery agents routinely imply otherwise, and that implication is the core of most harassment. The RBI Fair Practices Code sets out what agents may and may not do, and it is enforceable.
| Permitted contact hours for recovery agents | 7am – 7pm |
|---|---|
| What it means | Under the RBI Fair Practices Code. Contacting relatives or your employer is not permitted. |
as of 2026-08-17 · RBI Master Circular — Fair Practices Code · verified
What to know
Your rights when a loan goes bad are specific: contact only within permitted hours, no abuse or intimidation, no contacting your relatives, neighbours or employer about the debt, and the right to be given the agent’s identification. Lenders are responsible for the conduct of the agencies they appoint, which is the fact that makes a written complaint to the lender effective — it is their regulatory exposure, not the agency’s.
The escalation ladder is: written complaint to the lender first, then the RBI Ombudsman if unresolved within the prescribed period, and the police plus the cybercrime portal where there is threat, impersonation or misuse of your contacts. Keep a log — dates, times, numbers, screenshots. Complaints supported by a record get resolved; complaints without one do not.
Two decisions usually come up while this is going on, and both are separate from the harassment question. If the lender offers to close the account for less than the balance, read what a settlement costs you against a full closure before you agree. If you can clear the loan instead, the foreclosure charges decide whether that is worth doing now or at the next reset. And if the account is reported wrongly once it is closed, that is fixed through a credit report dispute, not through the recovery agent.
Frequently asked questions
Can recovery agents call my family or employer?
No. The RBI Fair Practices Code restricts recovery contact to the borrower and guarantor, within permitted hours, without abuse or intimidation. Contacting relatives, neighbours or your employer about the debt is not permitted, and the lender is answerable for the conduct of agencies it appoints.
Can I go to jail for not repaying a loan?
Defaulting on an unsecured loan is a civil matter, not a criminal offence. Criminal liability arises separately — for example, on a bounced cheque under Section 138 of the Negotiable Instruments Act, or where fraud is alleged. Threats of immediate arrest for non-payment are a standard harassment tactic and are not accurate.
How do I complain about recovery harassment?
Complain in writing to the lender first, keeping a log of dates, times and numbers. If it is unresolved within the prescribed period, escalate to the RBI Ombudsman through the CMS portal. Where there are threats or misuse of your contacts, also report to the police and at cybercrime.gov.in, and call 1930.
Sources
- Reserve Bank of India — Master Circular — Fair Practices Code for Lenders / recovery agent conduct (primary source)
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