In everyday life, individuals frequently lend money to friends, relatives, colleagues, acquaintances, or other people based on mutual trust. For example, Person X may lend ₹20,000 to Person Y, with an understanding that the amount will be repaid within a few days or months.

However, in some cases, the borrower fails to repay the amount and eventually becomes unresponsive. The lender may lose the money, while pursuing legal action may not be practical because the amount involved could be relatively small compared with the time, cost, and effort required to approach the courts.

An even larger concern is that the same individual may borrow smaller amounts from multiple people and repeatedly default. Since each lender may consider the amount too small to pursue legally, there may be no consolidated record of this behavior. As a result, the borrower can potentially continue obtaining money from other individuals without their previous defaults being visible to them.