Frequently Asked Questions (FAQs)
Explore answers to common questions about loan recovery, credit management, RBI compliance, and how to maintain a healthy financial profile. Our goal is to provide clarity on the recovery process and borrower rights — empowering you with transparent information and confidence at every step.
Recovery agents help banks recover dues from borrowers who have defaulted on loans. They operate under strict RBI guidelines to ensure lawful and ethical recovery practices.
Defaulting on loans or credit obligations can negatively affect your credit history, lowering your credit score and impacting your ability to secure future loans.
Yes, banks often provide restructuring or settlement options to help borrowers repay dues in manageable installments.
Banks follow RBI guidelines, maintain authorization letters, record calls, and ensure recovery agents are trained to handle cases professionally without harassment.
Agents must follow RBI regulations regarding calling hours and frequency to ensure borrowers are not harassed or intimidated.
Bad debt refers to loans or credit that have not been repaid. It affects creditworthiness, lowers credit score, and can limit access to future credit facilities.
Recovery agents are trained to follow ethical guidelines, respect borrower privacy, record calls properly, and adhere to RBI compliance standards.
RBI reviews bank policies, audits recovery processes, and can impose penalties for violations to ensure borrowers are treated fairly.
Yes, banks have mechanisms to address grievances. Complaints can also be escalated to RBI if recovery practices are abusive.
Visits are allowed only with prior notice, proper authorization, and during reasonable hours, following RBI guidelines.
Agents must carry a bank-issued identity card, authorization letter, and contact information to ensure transparency and legitimacy.
No, any intimidation or abusive behavior is strictly prohibited under RBI guidelines. Banks are responsible for their agents’ actions.
Credit history can be checked through authorized credit bureaus like CIBIL, Experian, or Equifax by submitting a formal request online.
DPD indicates the number of days a loan payment is overdue. It is critical in determining creditworthiness and risk for banks and lenders.
Yes, banks can levy penal interest or charges on overdue amounts, as specified in the loan agreement and RBI regulations.
Credit counseling can guide borrowers to manage debts, plan repayments, and maintain good credit standing while avoiding legal complications.
Banks can repossess secured assets only through legal methods outlined under SARFAESI Act, Indian Contract Act, and related RBI regulations.
Lok Adalats are forums for speedy resolution of small loans (usually below Rs. 10 lakh). They provide a low-cost, amicable settlement option.
Yes, co-borrowers may be contacted as they are equally liable for loan repayment, but the interaction must follow RBI guidelines.
Secured loans are backed by collateral, while unsecured loans are not. Collateral reduces risk for lenders and may affect recovery procedures.
A 90+ DPD marks the account as severely delinquent, lowering your credit score and signaling higher risk to future lenders.
Yes, late payment fees are allowed as per the loan agreement and RBI guidelines, but they must be communicated transparently.
Borrowers can approach banks with a formal request for settlement. Banks may offer one-time settlement options under RBI-approved policies.
Banks may continue recovery proceedings after verifying that the complaint is frivolous, with documented proof, following RBI rules.
Banks are required to inform borrowers about recovery agents, provide contact numbers, and display agent details on their official website.
Borrowers can request banks to limit agent contact, especially if already in dispute or undergoing negotiation.
Yes, banks maintain recordings of recovery calls to ensure compliance and protect both parties.
Restructuring involves revising loan terms such as EMI, tenure, or interest rate to make repayment feasible for the borrower.
No, banks cannot charge penalties outside the loan agreement and must adhere to RBI regulations.
RBI protects consumers by issuing guidelines for fair recovery practices, grievance redressal, and overseeing banks’ compliance.
Maintain timely payments, track EMIs, communicate with banks proactively, and avoid over-borrowing to prevent defaults.
DPD 0-30 means minor overdue, usually less impact; 90+ DPD indicates severe delinquency and major negative effect on credit history.
Yes, but banks must notify the borrower and ensure the new agent carries proper authorization and identification.
Settling a loan may still reflect as a partial payment or compromise, affecting the credit score compared to full repayment.
Banks may write off bad debts for accounting purposes but this does not absolve the borrower from repayment obligations.
Contact the credit bureau with documentation of the error; the bureau is required to investigate and correct discrepancies.
Repossession must follow SARFAESI Act procedures, including notices, waiting periods, and lawful auction of the collateral.
Banks send reminders via SMS, email, or calls before due dates to ensure timely payments and avoid penalties.
Yes, borrowers have the right to request and verify the agent’s authorization to ensure transparency.
Banks are advised to periodically review recovery mechanisms to improve practices, train agents, and comply with RBI guidelines.
Frequently Asked Questions - Part 2
Here we answer more queries related to financial management, credit health, loan recovery, and borrower rights to help you stay informed and make better financial decisions.
You can track your repayment history through bank statements, mobile banking apps, and by requesting a detailed account summary from your lender.
Yes, banks offer loan consolidation options to combine multiple debts into a single EMI, making repayments simpler and potentially reducing interest.
Missed EMIs can lower your credit score significantly, affecting your chances of getting future loans or credit cards at favorable terms.
A delay is a short-term overdue payment, whereas a default is a prolonged failure to repay, often leading to legal action and negative credit reporting.
Typically, defaults and late payments remain on your credit report for up to 7 years, depending on the credit bureau's policies.
Many loans allow prepayment, though some may charge a nominal fee. Always check your loan agreement to confirm prepayment terms.
Pay off overdue amounts, maintain timely payments, avoid new debts, and monitor your credit report regularly to gradually improve your score.
Credit bureaus collect credit information from banks and lenders to generate credit reports, which are essential for assessing creditworthiness.
Banks review salary slips, bank statements, tax returns, and employer verification to confirm your income before approving a loan.
Yes, all joint account holders are equally responsible, and defaults can negatively impact each holder’s credit history.
While requirements vary, most banks prefer a minimum score of 650-700 for personal loans to assess creditworthiness.
Yes, once dues are cleared, you can request the credit bureau to update your report to reflect timely payments or loan closure.
Multiple inquiries within a short period can lower your credit score slightly, signaling higher risk to lenders.
By definition, secured loans require collateral. Loans without collateral are considered unsecured and usually have higher interest rates.
Defaults indicate risk, making banks less likely to approve new loans or offering them at higher interest rates.
Some banks may allow negotiation or restructuring, but terms will depend on the borrower’s repayment ability and bank policy.
A written-off loan is removed from the bank’s books for accounting purposes but the borrower still owes the amount and it impacts the credit report.
Yes, complaints can be lodged with the bank and escalated to RBI if agents violate ethical or legal guidelines.
Avoid co-signing loans recklessly, maintain separate credit obligations, and educate family members about responsible borrowing.
No, reminders are not legal notices. Formal legal action requires written notice or court order as per RBI and legal guidelines.
Frequently Asked Questions - Part 3
Here are more queries answered to help you understand loan recovery, credit management, and responsible borrowing practices for better financial health.
Bad debt lowers a business's credit score, making it harder to secure loans, negotiate supplier credit, or attract investors.
Recovery takes time. Prioritize repayments, negotiate settlements, and avoid new debt to gradually restore creditworthiness.
You can lodge a complaint with your bank, escalate to the RBI, or pursue legal action for harassment or unethical practices.
A credit freeze prevents lenders from accessing your credit report, halting new loan or credit approvals until lifted.
Some banks allow partial settlements, often at a negotiated amount, but it may still impact your credit record.
Create a budget, prioritize essential expenses, avoid unnecessary loans, and monitor credit utilization regularly.
Secured debt is backed by collateral; loss affects assets. Unsecured debt has no collateral but still impacts your credit rating.
Some banks may restructure loans or adjust interest rates if you demonstrate repayment capability and negotiate early.
Depending on repayment behavior, it may take 12–24 months of consistent payments to restore a strong credit score.
RBI mandates ethical behavior, proper identification, and grievance handling for recovery agents, preventing harassment and unlawful collection practices.
Yes, all co-borrowers are equally responsible and late payments can negatively affect each individual's credit score.
Banks may prioritize loans based on amount overdue, age of the debt, and internal risk assessments to recover funds efficiently.
Yes, banks may reject housing loan applications or offer higher interest rates if past EMIs remain unpaid or defaults exist.
Banks provide agent identification, authorization letters, and contact numbers to borrowers to ensure transparency and verification.
A secured credit card requires a fixed deposit as collateral, allowing borrowers to demonstrate timely payments and improve credit score gradually.
Banks may offer EMI rescheduling or restructuring after reviewing your financial situation and repayment capacity.
A high debt-to-income ratio indicates over-indebtedness, lowering the chances of loan approvals and favorable interest rates.
Yes, balance transfer allows you to move an existing loan to another bank, often at lower interest rates, improving affordability.
Credit counsellors guide borrowers on repayment strategies, negotiate with banks, and provide financial planning advice to avoid defaults.
Checking your credit report quarterly helps track repayment behavior, detect errors, and take corrective actions to maintain good credit health.