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Missed an EMI? What happens next, and how to limit the damage

7 min readFacts valid until 2026-12-31
Man at home thinking while checking his phone

Short answer: A missed EMI (monthly loan payment) usually brings a penal charge, a separate fine on which no interest can be charged. It also starts a 90-day clock. The lender marks the account from the due date. After 90 days unpaid, it becomes a “non-performing asset” (NPA). That seriously hurts your credit report and starts formal recovery. Paying everything you owe before 30 days limits the damage. Talk to the lender now, not at day 89. And missing an EMI is not a crime by itself.

The situation

Arjun’s salary came late. His personal-loan EMI of ₹8,000, due on 5 November, bounced (the payment failed). He’s worried about the police, his CIBIL credit record and recovery agents.

The 90-day clock

RBI rules apply to all loans, including small personal loans. Lenders label a late account in stages. SMA stands for “special mention account”, an early warning label:

Days overdue Lender’s label What it means for you
From the due date SMA-0 (up to 30 days) Penal charge; reminders; reported to credit bureaus
31–60 days SMA-1 More calls; bigger mark on your report
61–90 days SMA-2 Final warnings
More than 90 days NPA Formal recovery; serious credit damage

Paying one EMI doesn’t undo an NPA. The account goes back to normal only when you pay all the arrears (all the money that is overdue).

Arjun’s dates

Fictional, counted the same way as RBI’s own example.

EMI of ₹8,000 due on 5 Nov 2026, not paid:

  • SMA-0 from 5 Nov
  • SMA-1 on 5 Dec 2026
  • SMA-2 on 4 Jan 2027
  • NPA on 3 Feb 2027

His KFS (Key Facts Statement, the loan’s summary sheet) lists a penal charge of 2% a month on the overdue amount. That’s ₹160 for one month and ₹320 for two, if only this one EMI stays unpaid. Since 2024, lenders can’t charge interest on penal charges.

The penal charge rules (since 2024)

  • A missed payment can bring a penal charge, kept separate from your interest. Lenders can’t add extra “penal interest” to your rate.
  • No interest can be charged on penal charges.
  • The charge must be reasonable, and your KFS and agreement must show it.
  • If you borrowed for personal needs, you can’t be charged more than a company or firm would be for the same missed payment.

Credit cards follow separate rules: a card is reported “past due”, and a late fee charged, only after more than 3 days.

What happens next depends on the loan

Loan First weeks 30–90 days After 90 days
Credit card Late fee after 3 days; interest Reported overdue; card may be blocked Recovery; settlement offers (see Settled, closed and written off)
Personal / app loan Penal charge; bounce charge Calls (8 am–7 pm only) Recovery; possible civil case
Two-wheeler / car Penal charge Notice to take back the vehicle, as the agreement says Vehicle taken back and sold after notice; you still owe any shortfall
Home loan Penal charge Flagged NPA, then a legal notice giving 60 days, then the lender may take possession of the property (not for loans of ₹1 lakh or less)
Gold loan Interest keeps adding Notice Auction after notice, at a reserve price (lowest allowed price) of at least 90% of value (85% if two auctions fail)
Microfinance Penalty on the overdue amount only Collection at the agreed place Calls only 9 am–6 pm; no harassment

What to do now

  1. Pay what you can, as soon as you can. If you clear all arrears before 30 days, the account stays at SMA-0.
  2. Call the lender’s official number. Ask for options such as a new due date or a short-term plan. (See Your next EMI doesn’t fit your budget.)
  3. Check your KFS for the penal charge and the bounce charge.
  4. Watch for the default alert. Lenders must send you an SMS or email when they report a late payment or default to credit bureaus (the companies that keep credit records).
  5. Know your rights: no calls before 8 am or after 7 pm, no threats, no shaming. (See A loan app is threatening you.)

Myths

  • “Missing an EMI is a crime and police will come.” Not paying a loan is a civil matter, a dispute between you and the lender, not a crime. (Cheque bounces are a separate legal issue.)
  • “They can add penal interest and charge interest on it.” Not since 2024. Only a separate penal charge is allowed, and no interest can be added on top.
  • “Pay one EMI and the NPA tag goes away.” Only clearing all arrears does that.
  • “The bank can take my house the day after I miss.” That needs NPA status, a 60-day notice and more steps.

What to check today

  1. Find your next due date and the penal-charge line in your KFS.
  2. Work out what you can pay before day 30.
  3. Call the lender today and write down the reference number.

Try it with your own numbers

→ Debt map: see all your payments and due dates together, and whether the minimums fit after basic needs.

Sources and review

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Educational information, not financial advice. Found an error? Tell us → · Corrections log

Frequently asked questions

What happens if I miss one EMI?

Usually you pay a penal charge (a fine kept separate from your interest), and the lender sends reminders. It also reports the missed payment to credit bureaus. Your account is marked SMA-0 (an early warning label) from the due date. Paying everything you owe before 30 days limits the damage. Call the lender's official number now and ask about options.

Will police come if I don't pay my EMI?

No. Missing an EMI is not a crime by itself. Not paying a loan is a civil matter, a dispute between you and the lender. Cheque bounces are a separate legal issue. Recovery calls are allowed only from 8 am to 7 pm, with no threats or shaming. If an app threatens you, read A loan app is threatening you.

When does a loan become NPA?

A loan becomes an NPA (non-performing asset) after more than 90 days unpaid. Before that, lenders use warning labels: SMA-0 for up to 30 days, SMA-1 for 31–60 days and SMA-2 for 61–90 days. An NPA seriously hurts your credit report and starts formal recovery. Talk to the lender now, not at day 89.

Does paying one EMI remove the NPA tag?

No. Paying one EMI doesn't undo an NPA. The account goes back to normal only when you pay all the arrears (all the money that is overdue). Work out what you can pay and tell the lender through its official channel. If even the minimums don't fit, our Hard to pay page helps you plan the next steps.

Can the bank charge interest on a late payment penalty?

No. Since 2024, lenders can charge only a separate penal charge for a missed payment. They can't add "penal interest" to your rate, and no interest can be charged on the penal charge. It must be reasonable and shown in your KFS (Key Facts Statement, the loan's summary sheet) and agreement. Find that line in your KFS today.

Will my lender tell me when it reports a missed EMI to CIBIL?

Yes. Lenders must send you an SMS or email when they report a late payment or default. The report goes to credit bureaus such as CIBIL (companies that keep credit records). Watch for this alert. Since July 2026, lenders report to the bureaus weekly, so a missed payment shows up quickly. Pay what you can as soon as you can.