A personal loan can be a convenient way to manage urgent expenses or consolidate debts — but missing repayments can lead to serious consequences. When a borrower fails to make EMI payments for over 90 days, the loan is classified as an NPA (Non-Performing Asset).
At Vizzve Finance, we believe in empowering borrowers with clear financial knowledge. So, let’s understand what happens when your personal loan becomes an NPA, how it impacts you, and what you can do to fix it.
What Is an NPA (Non-Performing Asset)?
A Non-Performing Asset (NPA) is a loan on which the borrower has not paid interest or principal for 90 days or more.
For personal loans, this means:
If you miss 3 consecutive EMIs, your loan account is marked as NPA.
The lender stops treating your account as “performing” and starts recovery action.
This classification is done under RBI guidelines, which apply to all banks and NBFCs in India.
What Happens After Your Loan Turns Into an NPA
Once your personal loan becomes an NPA, several financial and legal consequences follow:
1️⃣ Credit Score Drops Significantly
Your credit score can drop by 100–150 points (or even more) once your loan is tagged as NPA.
This reduces your ability to get new loans or credit cards in the future.
💬 Vizzve Finance Tip: Even one NPA record can stay on your credit report for up to 7 years, affecting future financial opportunities.
2️⃣ Penalty Interest and Late Fees
The lender adds penalty charges and additional interest on your overdue amount.
Your outstanding balance increases every month you delay repayment, making recovery harder.
3️⃣ Collection & Recovery Calls Begin
The bank or NBFC will start contacting you to recover dues. In many cases, they may appoint collection agencies for follow-ups.
If repayment is not made within a certain period, the lender may also:
Send legal notices, or
Initiate civil recovery actions under the SARFAESI Act (if applicable).
4️⃣ Loan Settlement or Legal Action
If you genuinely can’t repay due to financial hardship, lenders may offer a one-time settlement (OTS) — where you pay a lump sum lower than the total outstanding.
However, note:
A settled account is not considered “closed” in your credit history.
It still negatively affects your credit score.
If recovery attempts fail, the lender can file a case in Debt Recovery Tribunal (DRT) or initiate civil proceedings.
5️⃣ Co-Borrower and Guarantor Impact
If you had a co-borrower or guarantor on the loan, they too will be affected.
The NPA status appears on their credit reports, and recovery actions may include them.
Impact of NPA on Your Financial Future
| Aspect | Impact of NPA |
|---|---|
| Credit Score | Major decline (100–150 points) |
| Loan Eligibility | Difficult to get new credit |
| Interest Rates | Higher rates on future loans |
| Guarantor Liability | Guarantor also affected |
| Legal Consequences | Risk of court action or property attachment |
How to Avoid Your Loan Becoming NPA
1. Set up Auto-Debit for EMIs:
Ensure your EMIs are paid automatically every month.
2. Inform Lender About Financial Issues:
If you’re facing financial difficulty, contact your lender immediately. They may restructure or extend your tenure.
3. Consolidate Debts:
If you have multiple loans, consider debt consolidation with a single personal loan through trusted platforms like Vizzve Finance.
4. Prioritize High-Interest Loans:
Clear high-interest debts first to reduce long-term burden.
5. Monitor Your Credit Report Regularly:
Check your CIBIL report every 6 months to ensure there are no overdue entries.
Vizzve Finance Insight
At Vizzve Finance, we understand that financial challenges can happen to anyone. That’s why we focus on financial literacy, flexible loan options, and timely repayment support to help borrowers stay on track.
If your loan has slipped into default or you’re struggling with EMIs, our financial tools and insights can help you:
Negotiate repayment terms
Manage debts more efficiently
Protect your credit health
Remember — staying proactive can help you avoid NPA status and rebuild your financial confidence faster.
❓ FAQs:
1. What is the NPA period for personal loans?
A personal loan becomes an NPA if EMIs are not paid for 90 days or more.
2. Can I recover my credit score after NPA?
Yes. Repaying overdue loans and maintaining on-time payments for 12–18 months can gradually improve your score.
3. Will I be blacklisted for future loans?
You won’t be permanently blacklisted, but lenders will view you as high-risk until your credit improves.
4. Can an NPA be restructured?
Yes, lenders sometimes offer restructuring options like tenure extension or partial settlements.
5. How does Vizzve Finance help?
Vizzve Finance offers guidance on responsible borrowing, repayment planning, and credit improvement to help customers maintain a healthy financial profile.
Final Thoughts
An NPA status can cause serious damage to your financial standing — but it’s not the end. By staying disciplined, communicating with your lender, and taking timely corrective steps, you can regain stability.
At Vizzve Finance, our goal is to help borrowers stay informed, manage debts wisely, and make confident financial decisions that build long-term financial strength.
Published on : 4th November
Published by : SMITA
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