Banks and Non-Banking Financial Companies (NBFCs) in India are entrusted with the critical responsibility of providing financial support and, when necessary, recovering overdue payments. However, persistent reports highlight that, in many cases, these institutions—especially some NBFCs—have engaged in wrongful, inhumane recovery practices that deeply harm customers’ dignity and, in several tragedies, contribute to loss of life. While many NBFCs, including NeoGrowth, explicitly advertise ethical codes of conduct, real-world experiences sometimes tell a starkly different story.

Wrong Practices in Loan Recovery: The Reality Behind the Policy

Despite official policies that commit to transparency, fairness, and customer dignity, numerous NBFCs employ aggressive recovery measures through agents. Common wrongful practices include:

• Harassment by phone: Persistent, intimidating, or abusive calls at all hours, often targeting not just borrowers but their family, friends, or workplaces.
• Public shaming: Defamation via threats to expose the borrower’s debt to neighbours, employers, or colleagues.
• Abusive language and threats: Use of vulgarity, pressure through threats of arrest, or threats of dire legal consequences, often disproportionate to the default.
• Intrusive visits: Recovery agents showing up at homes or workplaces without warning, sometimes videotaping or photographing the borrower to intimidate them.
• Illegal coercion: Compelling borrowers to sell personal belongings, increasing EMIs forcefully, or sending forged, official-looking notices.

These practices are not only violations of privacy and dignity but frequently contradict Reserve Bank of India (RBI) guidelines, which clearly prohibit intimidation and mandate respectful engagement through ethical means. Yet, lack of enforcement and accountability has allowed such actions to become commonplace in sections of the NBFC sector, with borrowers bearing the repercussions.

The Tragic Consequences: Psychological Torture and Loss of Life

The severe psychological impact of relentless harassment cannot be understated. Individuals subjected to these recovery tactics often experience overwhelming anxiety, depression, and social isolation. There are documented cases in India where victims, unable to withstand the sustained abuse and humiliation, have tragically taken their own lives. Family members and vulnerable dependents, equally exposed to threats and derogatory treatment, become collateral victims, experiencing the ripple effects of institutional malpractice.

NeoGrowth, a prominent NBFC working with MSMEs, officially claims rigorous adherence to RBI’s Fair Practices Code, promising transparency, lawful procedures, and grievance redressal for clients. Its official reports and customer testimonials frequently focus on positive financial empowerment—highlighting entrepreneurs’ growth, access to digital finance, and business success supported by fair treatment.

However, broader NBFC criticism
NeoGrowth in harassment-led tragedies, NBFCs as a category—including its peers—have been contributors to India’s ongoing debt recovery crisis. Industry watchdogs and legal analyses warn that even NBFCs with robust ethics policies on paper can sometimes falter in monitoring third-party recovery agents, inadvertently exposing borrowers to the same risks that have marred the reputations of less scrupulous lenders.

The Need for Stringent Oversight and Borrower Protection

The intersection of life and livelihood is critical: when aggressive, unethical loan recovery harms those most in need of support, confidence in digital financial inclusion and institutional lending is severely eroded.

Key recommendations include:

• Robust enforcement of RBI guidelines and holding institutions—including NeoGrowth—to greater operational transparency in their recovery processes.
• Strict monitoring of recruitment, training, and conduct of recovery agents.
• Establishing easily accessible grievance redressal and legal support for harassed borrowers.

Conclusion

Despite the presence of formal codes and the promise of ethical lending—exemplified by NBFCs like NeoGrowth on their websites and reports—the lived experiences of customers across India demand urgent, ongoing scrutiny. Only when all recovery operations match the ethical standards outlined in official policies can the damage to customer lives and socio-economic trust begin to be repaired.

If you or someone you know is facing harassment or threats from bank or NBFC recovery staff, legal recourse is possible. Engage a consumer protection lawyer, document interactions, and consult the RBI’s grievance redressal platform for support.