How Borrowers Can Respond When NBFC Recovery Agents Contact Their Relatives

Why Does Contacting Relatives by Recovery Agents Matter in 2026?

Approaching a relative will not lead to wrongful recovery per se. Facts matter. A co-borrowing/guarantor spouse is not at the same place as say the elderly parent of a borrower who is unrelated to the loan contract.

RBI said in its 20 22 directions that regulated entities would be liable for the acts of their recovery agents. It prohibits “intimidation” or “harassment” including “conduct which is aimed at the public humiliation of the debtor or otherwise abuses or insults him or attempts to intrude upon the debtor’ s privacy or that of his family members, referees and friends”. Calls that are threatening or anonymous are also forbidden. Recoveries calls cannot occur before 8:00 am or after 7:00 pm.

With regard to digital lending, RBI has underlined the importance of data privacy and fair recovery practices separately. REs would continue to be liable for actions of their lending service providers. Information on recovery agents would need to be disclosed even in digital lending.

That line assumes significance in Delhi, New Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad and elsewhere in the country. Just because someone has taken a loan and is under financial stress, he cannot be publicly humiliated or abused during the loan recovery process.

What Does It Mean If an NBFC Calls Your Relatives?

Best read aloud. Consider RBI's bullet points about recovery calls to relatives. Evaluate the borrower's connection to the loan and the substance & intent of the call.

Take for instance the borrower defaulted on a personal loan and the lenders collection agent called the father. If the father is not the borrower/guarantor, the legal & regulatory ramifications are not the same as if the father had signed paperwork guaranteeing the loan.

The intent of the call factors into the agents behavior as well. A professional request for the borrower to call the lender is different than the agent telling a family member the borrower is a fraudster; threatening the family member; calling their job multiple times; or using vulgar language.

What Legal Framework Applies to NBFC Recovery Agents?

Rules governing obligations of regulated entities that outsource operations to recovery agents have also been stipulated by RBI.

For example, even though the RBI (Directions on Recovery Agents) dated 12 August, 20 22 state that ‘the responsibility and accountability for the outsourced function(s) rests with the regulated entity’, it clarifies “without resorting to intimidation/ harassment, intimidation of the borrower or his family members or his referees/friends.”

This of course all sits atop RBI’s broader regulation on NBFCs, the contract between lender and borrower, and any other applicable legislation.

As far as digital lending agreements are concerned specifically, RBI’s Digital Lending Guidelines mention privacy, data collection, lending service providers, and even recovery.

Digital lending complaints are covered under RBI mandating regulated entities to have a grievance-redress mechanism for handling such complaints.

If you happen to be a borrower and find yourself facing an issue with your lender, don’t assume it’s a criminal issue. NBFCs may have the contractual right to recover the amounts due, but they can’t just do anything to recover that money.

What Should You Do If Recovery Agents Keep Calling Your Family?

Screenshots of any WhatsApp messages, SMS messages and emails. Write down numbers from where calls are being received. Maintain a record of date, approximate time of call, name mentioned by the caller, name of the agency, if any and what was said during the call.

If the family member is the one who has received the call, get them to write down what happened during the call immediately, while it is still fresh in their mind. Do not incite them to question the recovery agent or behave confrontationally with the caller.

Once you have recorded the above details, contact the NBFC directly through its official customer-care or grievance-redressal number. Provide them with NBFC loan account details and clearly state that the person from whom recovery is being attempted does not owe money to the NBFC, if that is the case.

Ask the NBFC to give you the authorised recovery agency’s details/name of the officer in charge of the loan account wherever applicable.

A Loan Settlement Lawyer can assist a borrower by analysing the documents and drafting a written complaint to move forward with the matter, if necessary.

Can a Borrower Complain About Recovery-Agent Harassment?

Yes. If the borrower is dissatisfied with the resolution of the complaint he can escalate the matter to the concerned regulated entity if the mode of recovery is inconsistent with RBI directions or lender’ fair- practices code. Complaint – Do not use hyperbole, simply narrate facts. Include details like who called you, what were you told on phone, how many times you were called, were you acquainted with the person calling you ( about loan etc.).

RBI’ Integrated Ombudsman scheme provides borrowers with a mechanism for resolution of eligible complaints against service deficiency by regulated entities, through an alternative dispute redressal channel. The Reserve Bank–Integrated Ombudsman Scheme, 2021 came into force with effect from July 1, 2021, and replaced the Ombudsman Scheme, 2017 with respect to complaints pertaining to issues covered under the said scheme.

First and foremost is still applicable as a practical first step. Approach the concerned regulated entity through its own grievance redressal channel and get an acknowledgement of your complaint. Only after this, depending on the relevant scheme and facts of your complaint, can the complaint be escalated to RBI’ grievance redressal mechanism if it is an eligible complaint. Your loan settlement lawyer will help you with the paperwork and the escalation channel.

What If the Relative Is a Co-Borrower or Guarantor?

That is not true if the relative was a signatory on the loan documents.

A co-applicant can be contractually liable for the loan. A guarantor can be legally liable for the guarantee. Simply referring to someone as a “relative” does not create liability.

For this reason, borrowers should ignore generic information telling them the NBFC “will never” contact relatives.

The facts matter. The person’s contractual obligation on the debt matters. The method of recovery the lender is using matters.

If your parent, spouse, sibling or business partner signed as a guarantor, ask them for a copy of the loan and guarantee agreements before accusing the NBFC of improperly contacting them.

Loan Settlement Lawyer can review those documents and explain to you the difference between contractual liability and collection activity that may be a separate violation.

What If the NBFC Is Calling Relatives Because the Borrower Has Defaulted?

Defaults don’t justify every recovery method

Keep in mind that an NBFC can only attempt to recover that money which is owed to them legally. If the conditions of the loan, contract and account allow it, the lender can ask for payment, restructure the repayments, square up, prosecute, or foreclose on collateral (wherever legally possible).

However RBI also includes guidelines for how the recovery agents should act.

So the customer shouldn’t take advantage of either behavior.

Don’t assume every phone call to collect on the loan is harassment because you’re stressed. Don’t assume an agent can publicly shame you or threaten you because you owe them money.

What Documents Should You Take to a Lawyer?

A lawyer will typically need to see the underlying documents to give any meaningful advice.

Keep your loan agreement/sanction letter, latest account statement, repayment history and all correspondence with the NBFC. This includes any legal notice or settlement offer received from the NBFC/recovery agent and correspondence with recovery agents ( emails, sms etc). Also keep copies of screen shots of the above.

If the loan is against your business loan, keep relevant business records that explain why you've been unable to repay. To the extent you are considering a settlement, the borrower’s actual ability to make a proposed payment is also commercially important.

Loan Settlement Lawyers can review what you've compiled and give you a useful opinion on whether the issues sooner relate to recovery tactics, settlement, restructuring, litigation or some combination thereof.

When Should You Consult a Lawyer?

Legal consultation can be helpful especially if the case has gone beyond statements and payment reminders.

You may consider consulting a lawyer if debt collectors call third parties like your family members many times about the loan, threaten you with violence or job loss, disclose unnecessary information about your debt to third parties, send you vulgar messages or continue after you’ve sent a written notice to complain.

Speak to a lawyer at the earliest if you’ve received a legal notice, notice against a secured asset, summons from court or tribunal or a settlement letter with a short response time to pay the debt. Remote legal advice also makes sense for borrowers from Delhi NCR (Delhi, Noida, Ghaziabad, Greater Noida, Gurugram) where most of the dispute is on papers i.e. notices and communications.

How Can Loan Settlement Lawyers Help?

Loan Settlement Lawyer: Loan settlement, recovery & other bank related queries by borrowers.

Notice: Initial consultation would include account review. Loan agreements, payments made, outstanding balance, recovery notices/calls and legal notice(if any) would be reviewed. Provided that if relatives are being threatened/harassed then effort would be to record such activity and identify suitable grievance/legal remedy. However if the borrower has a genuine case of repayment hardship then it might also be essential to review the borrower's overall financial position (to analyze settlement or an alternative repayment strategy.)

Loan documents, account review, recovery calls/messages and clarification on the status of a loan can be managed by Advocate BK Singh. It's better to give a legal insight once the documents are reviewed rather than assure that every grievance would lead to XYZ results.

If you want to know about borrower issues in general, you can refer to Borrower Protection & Rights.

Frequently Asked Questions