Five loans had left Vikram with nearly Rs 8.3 lakh to repay, spread across five different banks. Keeping up with the EMIs had become difficult. Then the calls started.
One lender would contact him, then another. Each wanted to know when he would pay, how much he could pay and what he planned to do about the outstanding amount.
“I had five active loans across different banks, totalling close to Rs 8.3 lakh. Every day brought new calls, and the pressure was constant,” Vikram said.
Vikram’s account was shared with India Today Digital by Expert Panel, a debt and loan resolution firm that works with borrowers struggling to repay.
About six months after negotiations began, Vikram said his loans were settled at roughly 45% of the outstanding amount. The harassment, he said, stopped almost immediately after the firm took over communication with the lenders. But by then, he had already spent months dealing with recovery agents he had never met.
For context, recovery agents are people lenders turn to when borrowers fall behind on repayments. Banks and other regulated lenders can appoint third-party agencies to contact borrowers, follow up on overdue payments and seek repayment on their behalf.
Vikram’s experience was not isolated among the borrowers whose cases were shared with India Today Digital. One borrower said he was receiving more than 300 calls a day. Others described agents contacting parents, bosses and relatives, visiting homes and workplaces, shouting in front of neighbours or using abusive language.
A borrower who had lost his job said messages and repeated contact continued day and night even after he had explained his situation. In another case, agents contacted the borrower’s parents about the loan.
Some borrowers also described agents turning up at their homes. One said they shouted in front of neighbours, while another said they arrived when only his wife and children were present and used abusive language.
The firm’s client data puts numbers on some of these experiences. It shows that 39% of cases involved recovery calls or abusive language. Another 28% reported frequent contact from multiple lenders, while 11% reported home or workplace visits and 8% reported threats of legal or police action.
Among borrowers reporting severe harassment, continuous or excessive contact accounted for 42% of mentions, threats or intimidation for 38%, home or workplace visits for 32% and abusive or insulting language for 27%. Social or reputational harassment, including contact with bosses or family members, accounted for 11%.
These accounts come from the firm’s clients and are not representative of all borrowers in India. But they offer a glimpse of , with repeated calls, threats and recovery pressure extending into borrowers’ homes, workplaces and family lives.
The RBI has rules governing this conduct. Regulated entities and their recovery agents , including verbal or physical abuse. They cannot publicly humiliate borrowers or intrude upon the privacy of family members, referees and friends.
Persistent calling, threatening or anonymous calls and contact outside prescribed hours are also prohibited. The lender remains responsible for the conduct of its recovery agents.
For digital lending, the RBI has separately required regulated entities to disclose recovery-agent details to borrowers and ensure that their lending service providers comply with applicable recovery requirements.
While lenders have a right to recover money that is owed, the rules set limits on how that recovery can be pursued.
For a distressed borrower, however, those rules can feel far removed from the experience of being pursued for repayment. Someone who has lost a job, missed several EMIs and is facing repeated contact may not know which agency is approaching them, what the agent is allowed to say to relatives or an employer, or where to complain.
That is where debt-resolution firms have found a critical role.
Manoj has been working with a legal team for more than nine months on five separate loans. Four have been fully settled so far. He said having someone explain each step and remain reachable whenever a recovery call came in made the process easier to manage.
“Debt this size does not resolve overnight,” Manoj said. “But having steady, informed support throughout made it feel manageable instead of overwhelming.”
Meanwhile, Sanjay was dealing with recovery agents from more than one bank at the same time. Two of his bank loans have been released, according to the firm, while a third is in progress.
He said the biggest difference was that the company handled communication with each bank directly, meaning he no longer had to take the stressful recovery calls himself.
The firm says more than 35,000 borrowers have received debt counselling and harassment relief, while more than Rs 2,200 crore in debt has been resolved across individuals and small businesses. More than 12,000 cases have been closed with settlement letters or no-objection certificates, it says.
While the above figures come from the company’s own client base, they offer a glimpse into a brewing household debt problem across the country, often triggered by job and income losses.
The borrowers in this story reached that point for different reasons. Amit was carrying EMIs close to his monthly income when he lost his job. Rakesh fell behind on business and personal loans after two major projects fell through. Vikram was dealing with five loans at once. Others found themselves facing recovery agents from multiple lenders.
Among borrowers in the firm’s data who said they could no longer repay, job loss or salary reduction was the most commonly cited reason, at 31%. High EMI burden relative to income accounted for 28%, multiple loans or over-borrowing for 19%, medical or family emergencies for 12%, business losses for 7% and interest rates or penalties for 3%.
Amit is still without a steady income after losing his job, but the EMIs that were already eating up most of his monthly earnings have not stopped. Negotiations with his lenders are continuing.
“I lost my job a few months ago, and my income has not recovered since,” Amit said. He said the debt-resolution firm had continued negotiating with his lenders even while his situation remained unresolved.
Rent, food, school fees, insurance and family expenses do not disappear when a salary does. For someone already carrying a heavy EMI burden, a few months without income can be enough to push repayments into arrears.
Manoranjan Sharma, chief economist at Infomerics Ratings, said households whose EMIs absorb most of their income are particularly vulnerable to even a short disruption in earnings.
“Fixed repayments cannot fall rapidly,” Sharma said. The vulnerability is especially high for single-earner households, workers without formal social protection and borrowers carrying high-interest unsecured loans, he said.
“Financial resilience requires an emergency buffer and sufficient post-EMI income for food, housing, insurance and essential care,” Sharma said.
Rakesh’s cash-flow problem came from his business. Two major projects fell through, leaving him behind on both business and personal loans. The money he had expected to come in did not, but the repayment obligations remained.
“I did not know where to start.”
Over about five months, he worked through vendor negotiations and loan settlements with the legal team handling his case. “I am now completely debt-free, which still does not feel entirely real.”
For borrowers juggling several loans, repayment can quickly become a cycle. The firm’s data shows that 60% were either making only minimum payments or had stopped paying, while 60% had EMIs that exceeded or nearly equalled their monthly family income. The two categories overlap. Another 40% were using new loans or credit cards to pay existing EMIs.
At that point, borrowing can stop being about meeting a new expense and become a way of keeping an old loan alive. One EMI is covered by another loan or a credit card, but the household is left with another repayment to make.
Sharma said this is where multiple loans can become a debt trap. An earlier India Today Digital investigation found , with borrowers taking fresh loans or using credit cards to keep up with existing EMIs.
“The problem compounds when short-tenure, high-cost unsecured loans coexist with credit-card revolvers, app-based credit and informal borrowing,” he said.
Warning signs include missed or part-paid EMIs, using credit cards for essentials, dwindling emergency savings and repeated borrowing to meet instalments, Sharma said.
“The key metric is consolidated debt service, not whether each individual loan was originally ‘affordable’,” he said.
India’s household debt has risen alongside the expansion of formal credit.
The RBI’s latest Financial Stability Report puts household debt at 45.5% of GDP, with non-housing retail loans accounting for 58.4% of household borrowings. Consumption-related loans remain the biggest driver of household borrowing, although the RBI has also said borrower quality has improved.
Sharma said the 45.5% figure was a concern but not a reason for alarm by itself.
“Repayment is a function of household cash income, job security and liquid savings,” he said.
The bigger risk, Sharma said, is concentrated among borrowers using personal loans, credit cards, consumer-durable finance or gold loans for consumption, where a slowdown in income or employment can quickly turn manageable instalments into distress.
The rise in household debt should not automatically be described as a banking-sector crisis. The composition of that debt matters. A home loan, an unsecured personal loan and credit-card borrowing carry very different risks, particularly when repayment depends on future income.
Yet every loan rests on the same assumption. That the borrower will have the money to repay it in the future.
For an individual family, that calculation comes down to monthly income against rent, food, education, healthcare, insurance, family expenses and debt repayments. Whatever remains is the cushion for the next unexpected expense.
When that cushion is healthy, a temporary setback can be absorbed. When it is thin, another loan may be the easiest way to get through the month.
RBI data has previously shown household liabilities rising as borrowing from banks and NBFCs increased, even as household net financial resources weakened from the unusually high levels seen during the pandemic period.
That makes the quality of household borrowing as important as its size.
These borrowers got into trouble in different ways. Vikram was carrying five loans. Rakesh lost two major business projects. Amit lost his job. Manoj has spent more than nine months trying to settle five separate loans.
Some have managed to settle their debts. Others are still negotiating. But for many, the difficult part was not just finding the money. It was dealing with what came after they fell behind — the calls, messages and visits, sometimes involving family members, colleagues or neighbours.
The loans had started for different reasons: a hospital bill, education, a business expense, or simply to get through a difficult month. Once the money stopped coming in, however, the reason for taking the loan no longer mattered to the lender. The payment was still due.
For a household already stretched by rent, school fees, medical bills and everyday expenses, a lost job or a failed business deal can leave very little room to absorb another shock.
And sometimes, the first reminder that a borrower has run out of room is not a bank statement or a missed-payment notice.
It is the phone ringing again.