Andhra Pradesh High Court tells LIC Housing Finance to recover dues only by lawful means

The Andhra Pradesh High Court on 13 October 2026 directed LIC Housing Finance Ltd to recover any dues from a borrower only through procedure recognised by law and not through strong-arm tactics. The order came on a writ petition in which the borrower alleged harassment by loan recovery agents.

What Happened

According to the order, the borrower alleged that the lender had sent recovery agents to the borrower's house, made continuous phone calls and humiliated the borrower in front of neighbours, without following guidelines issued by the Reserve Bank of India, including a memo dated 12 August 2022. The petition also asked the court to direct RBI to ensure that the lender and its agents follow RBI's guidelines on debt collection.

The court referred to the Supreme Court's ruling in ICICI Bank Ltd v. Prakash Kaur, which, as quoted in the order, deprecated the practice of hiring recovery agents who are musclemen and said a bank should resort to procedure recognised by law if a borrower defaults on instalments.

Per the order, the lender contended that it never sent agents and that it intends to follow the law for recovery. The court therefore saw no purpose in keeping the petition pending and disposed of it, directing the lender to resort to lawful procedure instead of strong-arm tactics. It made clear that the lender is not stopped from taking steps in accordance with law to recover any money payable. No costs were ordered.

What It Means

For borrowers, the order restates the court's position that a lender facing a default must use the legal recovery process rather than intimidation. It does not cancel any loan or reduce what is owed; the lender keeps the right to recover dues lawfully.

Borrowers with a complaint against an RBI-regulated lender can approach RBI at https://cms.rbi.org.in.

Source: High Court judgment