Missed your personal loan EMI? Your Cibil score may get affected, if you want to avoid it then do this immediately..

India's banking sector is currently facing the big challenge of personal loan defaults. The situation is especially worse in small-ticket loans and rural areas. According to the Fintech Association for Consumer Empowerment (FACE), by March 2025, the rate of loans overdue for more than 90 days has reached 3.6%, the highest in the last one and a half years.

Young people under the age of 25 and borrowers living in tier-3 cities and villages are facing the most problems. Their ability to repay installments has weakened amid new jobs, limited income, and rising inflation. Due to this, the NPAs of private banks are also increasing - like Kotak Mahindra Bank's NPA reached 1.48% in April-June 2025.

Double pressure of default on youth and rural customers
The source of income is limited in rural areas, and seasonal fluctuations have a greater impact. At the same time, young people under the age of 25 are often taking credit for the first time and do not have a stable income. Due to this double pressure, it becomes difficult for them to pay EMI on time, which increases the risk of a falling credit score and difficulty in getting a loan in the future.

Missed an EMI? So first of all, take these 5 steps.
If you miss any EMI, it will directly affect your CIBIL score. If you want your CIBIL score not to deteriorate, then you need to take the necessary steps for this. Let's know which 5 steps you can take.

1- Talk to the bank immediately

Tell the bank your problem clearly and talk about the possibility of deferring the installment or restructuring.

2- Look for the EMI holiday option

Some banks provide temporary relief in a financial crisis, which is called an EMI holiday. During this time, you do not need to pay any EMI.

3- Consolidate the debt into one
With debt consolidation, only one installment has to be paid every month. You can merge your several loans into one and get the EMI restructured.

4- Consult a credit counsellor

Seek help before you receive a legal notice. You should talk to a credit counsellor or your financial advisor. This will help you avoid damaging your CIBIL score.

5- Keep a record of all conversations
If you talk to the bank about EMI or a loan, keep a complete record of it. This will be useful in case of any dispute in the future.

Legal and financial effects of default

A loan outstanding for more than 90 days turns into an NPA.

Banks can send recovery agents (as per RBI rules).

Continuous non-payment can lead to legal notices and court cases.

Penalty, increased interest, salary deduction, and even property seizure can occur.

A credit score can fall by 150+ points in 6 months, which may make it difficult to get a loan or credit card in the future.

Negotiation is better than litigation.
RBI advises banks to resolve the matter with the borrower lovingly. If you talk to the bank on time, loan restructuring or one-time settlement is possible. This is better than a court case and long dispute.

Personal loan default is not just a missed EMI, but it can affect your entire financial future. Especially in the current environment, where NPAs are increasing and banks are getting strict, it is important to take caution and timely action. Only a negotiated solution, control over expenses and timely payment can save your credit score and financial health.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.