Loan harassment affecting women differently: From financial stress to social stigma

Some of the most vulnerable women in regards to loan recovery harassment come from the microfinance-related issues. In this regard, these women primarily take loans via self-help groups (SHGs), and these loans are supposed to empower them economically. The government of Tamil Nadu has taken an active role in addressing loan recovery harassment by enacting the Tamil Nadu Money Lending Entities Act, 2025. This act targets the predatory recovery tactics aimed at vulnerable groups, where constituents are women, farmers, and SHG members.

By introducing this act, the Tamil Nadu government has prohibited coercion, intimidation, property interference and other degrading practices. If convicted, offenders can face punishment of imprisonment of 3-5 years, along with fines up to INR 5 lakh. If the loan recovery harassment results in the suicide of the borrowers, the convicts may be charged under Section 108 of the Bharatiya Nyaya Sahita, 2023.

“Much like its neighbour, the Indian state of Karnataka has introduced the Micro Loan and Small Loan (Prevention of Coercive Actions) Ordinance, 2025. This ordinance has since been tabled as a bill. With this legislation, the goal is to regulate unregulated lenders beyond banks or RBI-regulated NBFCs. This bill obligates them to undertake a number of key measures that begin with registering with the district authorities within 30 days. It also obligates them to avoid collateral demands and only levy interest, processing charges, insurance, and penalties. Furthermore, the bill ensures they submit detailed quarterly and annual statements. However, the highlight of the bill is the steep penalties for illegal loan recovery practices that can lead to up to 10 years of imprisonment and INR 5 lakh fine for coercive recovery practices.” says Anurag Mehra, Founder of Expert Panel.

Familial harassment

In case of larger loans, such as housing, personal, or business loans, the borrowers are often male. However, recovery agents tend to visit the family home for recovery, where women and children have to bear the brunt of illegal and aggressive recovery tactics. They often do not have any part in the loan, yet have to face the mental and familial harassment from the agents. In India, communities are often closely knit, and in the case of defaulted loans, social stigma is often unavoidable. Women are generally more visible and socially interactive in neighbourhoods, which is why they have to face the most in terms of reputational hit. There have been reported cases where recovery agents have resorted to defaming borrowers by indulging in the circulation of morphed images that target women’s reputation and cause long-term emotional damage. Many households in lower-income brackets tend to make impromptu decisions owing to the stress of harassment, like borrowers fleeing, family abandonment, and even committing suicide. In these cases, it is the women of the family who have to bear the burden inevitably and are required to face financial uncertainty and societal shame for breaking bread for their families.