However, borrowers can breathe easy now. RBI has come up with a set of 9 guidelines which a bank and its recovery agents need to follow for the repayment of a loan. In addition to this, the Supreme Court had passed a historic ruling against the employment of goons by banks.

To understand the repayment story better, we must consider all sides of it. There are three main protagonists in the recovery story. The main character is the borrower, with the other two protagonists being the lender and the recovery agent. While it's the norm to sympathize with the harassed individual, banks have another tale to tell. The banks too have their own reasons for outsourcing debt recovery. Banks argue, what choice are they left with if someone refuses to pay up the loan.

Showcasing one such choice, Axis Bank chairman and CEO P J Nayak, says, "Axis Bank has an in-house collection department; we also employ reputed third-party collection agencies that comply with non-aggressive methods."

Nayak is referring to the additional usage of women as recovery agents. Adhikrut Jabti Evam Vasuli is one such organisation which is being increasingly contacted by many nationalised banks for the recovery of their outstanding loans. They work on the principle that persuasion is better than prosecution. As women they make defaulters understand the problems they may face if they don't pay. “Defaulters, who are generally men, find it embarrassing to be addressed by a woman and hasten to pay up large parts of the loan Those who find it easy to bribe male recovery agents realize that they can't do the same with women,” says Vasuli joint managing director, Manju Bhatia.

Also, banks are giving options to borrowers to talk to them directly, instead of tackling recovery agents. Nayak says, “If the borrower doesn't want to deal with a recovery agent, he can approach the bank for direct negotiations. If there are genuine reasons holding up repayment, we can work with it. For example, credit cards dues can be easily converted to an EMI, which is part payment, instead of the total outstanding due," he adds.

Also, most banks are willing to make adjustments if the reasons for default are genuine. An HDFC Bank spokesperson says that if there is a real problem, the bank works out things as per its policy.

If the bank is open to an amiable solution then what is the problem with recovery agents?

Banks point out that recovery agent’s work on a commission basis and hence, are highly motivated to show efficiency.