What are the legal actions taken against defaulters who do not repay their loans?

In difficult times, many people take personal loans to make ends meet because it is easily available. Personal loans are unsecured loans, meaning you do not need to mortgage anything for it. But its interest rates are very high. In such a situation, it becomes very difficult to repay it at times. But do you know what action the banks take for recovery if the borrower is unable to repay the loan after taking a personal loan? What legal action is taken against the defaulter in this case? Know about this here.

Banks follow RBI rules.

When the borrower misses 3 consecutive EMIs, then he is put in the list of defaulters. But as soon as he becomes a defaulter, immediate action is not taken against him. The bank has to follow RBI guidelines for loan recovery. In such a situation, the bank first sends a reminder notice to the customer to give him time to repay the loan. Then it charges late payment fee. Negotiations are held with the borrower regarding loan repayment. But when negotiations do not work, then the bank takes action.

When does legal action come?

Many times banks also take the help of agencies to recover the loan. Agents can ask to repay the loan over the phone or by visiting home. This can increase the problems of the customers, they may also have to face mental stress. When all the methods do not work even after trying, then the bank can take the help of the court. In such a situation, a case can be registered against the borrower. Money can also be deducted from your salary by the order of the court.

CIBIL score is affected

If you do not repay your loan, you are declared a defaulter and this directly affects your CIBIL report because this score is prepared on the basis of your repayment history. If your CIBIL score is bad, then in the future if you need to take a loan from the bank again, then you will face difficulty in that. In this condition, the bank can also refuse to give a loan.