The debt collection business is a relatively new concept in India. Like many modern tools, this business was also introduced to India by foreign businesses who came to India in horde in early 90’s and brought with them myriad modern tools, practices and systems. Like other sectors, banking also witnessed a large scale foreign firms setting up their operations in India. Retail consumer loans became an important product in the portfolio of the banking industry. Easy availability of credit also bought with it the problem of payment defaults, which eventually led to the emergence of debt collection agencies.

In India, debt collection was never treated as a specialized job and was always treated as one of the jobs that legal departments of the banks and financials institutions were required to undertake. Legal department would approach the collection job strictly as a legal issue rather than doing it with the objective of revenue collection. For legal department, the only tool available was litigation and no other non-litigation tool was applied. Long and winding legal processes, the Indian legal system could not help the cause of the legal departments of the banks. On the other hand, foreign banking firms introduced the concept of specialized debt collection services. Debt collection services became one of the many services that began to be outsourced to specialized agencies. These agencies mushroomed  in metropolitan cities including Delhi and Mumbai. These agencies were initially supported by the respective banks; they were very small and their staff was uneducated, being not aware of anything about the concept of the debt collection. The agencies usually worked in a specific area of the city for only one client – mostly a bank.
The third-party debt collection industry plays an important role in the Indian economy. The industry employs  hundreds of thousands of Indians as collection professionals, who collect on past-due accounts referred to them by various credit grantors, such as credit card issuers, banks, retail stores, hospitals and other health care services, or by government departments. Business purchases of this industry and personal purchases by its owners and workers ripple through the economy, supporting hundreds of thousands more jobs across the country. Further, the industry benefits the economy by recovering billions of dollars in delinquent debt each year that would otherwise go uncollected. The economic benefits of third-party debt collection are significant. Citibank has been the pioneering company in India which started hiring the services of debt collection agencies to collect the debts.