Nowadays, it has become easy to take a personal loan, but if it is not repaid on time, it can have serious consequences. In such a situation, the question arises whether one can go to jail for not repaying the loan. The answer is that not repaying the loan regularly is not a crime in itself, but in some situations, the matter can also become criminal. So, if you are also worried about the installments of a personal loan, then you need to know what legal action the banks take in such cases and in which situations arrest can be made.
Not repaying the loan is a civil matter, not a criminal matter
Under Indian law, not repaying a personal loan is a civil matter, not a criminal matter. This means that you cannot be sent to jail just for not repaying the loan. Banks or NBFCs (non-banking financial companies) can file a civil case against you under the legal process. In this, your property can be confiscated or a part of your income can be recovered directly. But, you cannot be put behind bars just for not repaying the loan.
If the check bounces, the case can become criminal
However, if the check given to repay the loan bounces, the case can become a criminal offense under Section 138 of the Negotiable Instruments Act, which can also result in a jail sentence. Therefore, always ensure a sufficient balance in your account while issuing a check. Also, if a person knowingly takes a loan based on wrong documents or commits fraud, a case can be registered against him under Section 420 (fraud) of the Indian Penal Code, which has the possibility of jail. It is wise to take a loan honestly and repay it.
RBI rules
As per the instructions of the Reserve Bank of India (RBI), banks cannot behave unfairly with any borrower. They have to give proper notice first and keep the channels of dialogue open. Often, banks also offer the option of restructuring so that customers can pay in easy installments.
Recently, the government has proposed to bring strict laws in such cases, including action against illegal digital loan apps, which can also lead to up to 7 years of imprisonment and heavy fines. So, if you are having trouble repaying the loan, do not panic, but contact the bank immediately and explain your situation.
Having trouble repaying the loan
If you have taken a personal loan and you are unable to repay it, do not panic! Contact the bank immediately, explain your situation and talk about repayment options. Avoid fraud or deliberate non-payment of the loan, otherwise the matter may be criminal. Banks often try to find a solution by understanding your financial situation, such as reducing the installments or extending the payment period. Therefore, talking openly is the best way.