If a borrower in India fails to comply with recovery proceedings, there can be penalties imposed by the creditor or the court. These penalties can include: Penalty Interest: If a borrower fails to pay the loan installment or the interest amount within the due date, then penalty interest can be charged by the creditor. This rate of penalty interest can vary from lender to lender. Legal action: The creditor can initiate legal action against the borrower to recover the outstanding amount. This can include filing a case in the debt recovery tribunal or initiating arbitration proceedings. Credit Score Impact: If the borrower defaults on the loan repayment, it can have a negative impact on their credit score. This can make it difficult for them to obtain loans or credit in the future. Asset seizure: If the borrower has provided collateral for the loan, the creditor can seize and sell the collateral to recover the outstanding amount. Blacklisting: In extreme cases, the creditor can blacklist the borrower and report them to the credit bureaus. This can have serious consequences on the borrower's ability to obtain loans or credit in the future. It is important for borrowers to comply with the repayment terms agreed upon with the creditor to avoid any penalties or legal action. If the borrower is unable to make the payments due to unforeseen circumstances, they should communicate with the creditor and try to negotiate a new repayment plan.