Suing Loan Agents for Misleading Interest Rates: Your Legal Remedies in India

A growing number of borrowers in India are being encouraged to inquire about their loan agreements and repayment plans through the addition of financial education. However, one concerning pattern that continues to exist: loan agents or other third parties, who essentially function as middlemen, deceive the borrower about interest rates, freight costs, and other crucial details in order to persuade them to accept a loan at a rate greater than what was initially provided.

In case you have been deceived into agreeing to a loan on imagined pledges or terms that have been falsely impacting you and have inked the loan, you aren’t at the mercy of the loan.
The remedies in Indian law are overt and practicable due to the provisions of the Consumer Protection Act, 2019, the RBI Fair Practices Code, as well as grievance redressal mechanisms, Consumer Forums and the Banking Ombudsman.

Misrepresentation by Loan Agents

The Problem

Many borrowers, particularly first-time or semi-literate, are targeted by DSAs (Direct Selling Agents) or loan agents, who are typically freelance and give loans with cheap interest rates.
After disbursement of the loans, most borrowers end up bouncing out:
● Interest rates are way above the pledged ones
● Secret costs in processing or insurance costs
● Fraudulent computation of EMIs
● No payments or foreclosure fees are stated beforehand.

Similar gestures are considered fraud and illegal trade practices under Indian consumer law.

Legal Grounds: “Legal” Aphorisms of the Law

1. Consumer Protection Act, 2019

This Act outlines some of the illegal trade practices as misrepresentation, non-disclosure, and false advertising.
A borrower is declared a consumer in case a loan is given to buy non-commercial goods, and is permitted to:
● Make a complaint against the bank, NBFC and/or loan agent
● Claim to be compensated financially, for internal impatience and indeed punitively in irritated situations

2. RBI Fair Practices Code

All banks and NBFCs must adhere to the RBI’s guidelines:
● Reveal the full terms and conditions (rate of interest, processing fees, etc.) in written form
● Offer permission letters and complete amortisations
● Ensure DSAs or third-party agents work transparently and immorally

If a loan agency fails to follow these standards, the lender considers it non-compliant, as it has vicarious liability for its agent.

How to Act Step by Step

1. Gather and Retain Substantiation

You start by amassing:
● Recordings of calls, emails, and WhatsApp exchanges during which the interest rate was mentioned
● Duplicates of all loan papers
● Loan permission letter, loan prepayment plan, and any published announcement literature

Your complaint must be grounded in substantiation.

2. Serve a Legal Notice

Write a notice of legal intention via an attorney and further the same to:
● The backing bank / Non-Banking Financial Company
● The Loan agent or agency, in case of knowledge

The notice sets out clearly the disparity between factual and promised terms and seeks compensation or cancellation.

3. Make a Complaint

You can approach any of the following:

a) Consumer Forum
Train your case in the District, State, or National Consumer Controversies Redressal Commissions, depending on the quantum of claim made.
Relief may include:
● Return of remittance
● Mental agony and importunity damage
● Correction of the loan terms

b) Bank Ombudsman
Complain online or via post at the RBI Integrated Ombudsman Scheme.
The Ombudsman will act as a conciliator and can instruct compensation or corrective action.

c) Complaint Operation System – RBI (CMS)
Any violation by DSAs or banks can be reported through 👉 https://cms.rbi.org.in

Appeal to Precedent and the Pressure of Opinion

The strength of your claim stems from the use of previous court decisions in which parties who made loans were required to repay them due to misrepresentations.
You could also:
● Train an RTI with RBI to see whether the bank/agent has made complaints.
● Use social media and consumer forums to share your case (do not defame anyone).

Conclusion

Borrowers Do Not Have Power
This isn’t only unethical but illegal — to misrepresent the rates by loan agents. The Indian law provides borrowers with the right to full exposure, honest communication, and legal protection.
If you have been a victim, don’t suffer in silence. Take action, collect evidence, and seek justice through the appropriate legal channels.
Just flash back — the first step to saving your plutocrat and your peace of mind , is to know your rights