For millions of Indians, spending nearly all their income on EMIs has become more than a financial burden - it has turned into an emotional and psychological struggle. Behind every unpaid EMI lies a family grappling with job loss, medical emergencies, rising living costs, and mounting pressure from recovery agents. A new analysis by an Expert Panel, based on inquiries and counselling sessions with distressed borrowers, paints a deeply concerning picture of the country's growing debt crisis.
Key Highlights
- 60% of families spend nearly their entire income on EMIs, leaving little room for expenses.
- 40% of borrowers repay existing loans using fresh loans or credit cards, deepening the debt cycle.
Severe Financial Distress Among Borrowers
The findings reveal that nearly 60% of borrowers seeking assistance are either making only minimum payments or have completely stopped repaying their loans, indicating severe financial distress. Even more alarming, 60% reported that their monthly EMI obligations either match or exceed their family's total monthly income earned, leaving little to no room for basic household expenses. Another 40% admitted they are repaying existing loans by taking on fresh loans or relying on credit cards - highlighting a dangerous debt cycle that many find impossible to escape.
The reasons behind borrowing are far from reckless spending. Medical emergencies account for the largest share at 26%, followed by family and personal expenses such as weddings and education (22%), job or business-related challenges (18%), and daily household needs (15%). These figures suggest most borrowers entered debt out of necessity rather than choice.
Recovery Tactics Take a Toll
When repayments become impossible, the consequences extend far beyond financial penalties. The survey found that 35% of borrowers reported facing harassment, while 17% experienced severe intimidation, including threats, abusive language, and home visits by recovery agents. Additionally, one in five borrowers received legal notices from lenders, adding further stress during an already vulnerable period.
Borrowers described a relentless barrage of recovery tactics: nearly 39% reported abusive recovery calls, 28% said they received repeated calls from multiple lenders, while others faced workplace visits, threats of police action, and public humiliation. Some borrowers reportedly endured over a hundred calls a day, with agents contacting employers, family members, neighbours, and references in an attempt to force repayment.
Also Read: Household Debt Hits Decade High of 47.8% of GDP: RBI Report
The personal accounts collected during counselling sessions reveal the deeper human cost behind these statistics. One borrower shared being contacted hundreds of times daily, with recovery agents calling their workplace and relatives and even visiting their home - describing the toll this took on their mental health. Others recounted recovery agents shouting in front of neighbours, sending photographs of their homes, and repeatedly contacting family members, leaving them feeling terrified and emotionally exhausted.
Some of the most concerning findings from the survey point to the severe emotional toll of relentless recovery pressure on borrowers, with several individuals describing feelings of hopelessness during counselling sessions. These accounts underscore the urgent need to recognise debt-related distress not merely as a financial issue, but as a serious mental health concern.
Commenting on the findings, Anurag Mehra, Director, Expert Panel said: "The numbers tell us that India's debt problem is no longer just about missed EMIs—it is about people losing their dignity, peace of mind, and in some cases, even the will to live. Most borrowers we counsel are not habitual defaulters; they are ordinary individuals pushed into financial hardship by medical emergencies, job losses, or unexpected life events. Recovery must happen within the framework of empathy, law, and human dignity. Financial institutions, regulators, and policymakers need to work together to ensure that borrowers receive structured resolution mechanisms instead of intimidation and psychological harassment."
The findings highlight a growing need for responsible lending, accessible debt counselling, stronger borrower protection, and stricter oversight of recovery practices. As household borrowing continues to rise across India, ensuring that financial recovery does not come at the cost of human dignity will be critical in building a more resilient and compassionate credit ecosystem.
