Can Lending Startups Master The Art Of Loan Recovery Without Crushing Defaulters?

Last month, a family of five in western India committed suicide citing huge debt and harassment from lenders.

This year, with two months still left on the calendar, the number of suicides has doubled from the last year. And the financial crisis, debt and harassment by recovery agents have been at the core of many of these suicides, be it, farmers, entrepreneurs or others.

In post lockdown coupled with moratorium, longest economic recession and lowest ever consumer spending, the stories of #OperationHaftaVasooli have exponentially risen across the country with lending startups using aggressive tactics to achieve some semblance of a recovery.

While banks and large NBFCs prefer to outsource loan recovery to agents, most of the startups which act as either small NBFCs or as distribution partners of banks/NBFCs have to get their own hands into the mud for their loan recovery, and most rely on tactics such as calling contacts and other known associates when borrowers are unable to repay on time.