Social pressure is actually a big part of the success of microcredit initiatives. In many ways it mirrors arrangements that were common in the now-developed world at the time of the industrial revolution (i.e. your social circle would likely know about your outstanding debts, because anyone’s entire world was very restricted).

I wonder if this is a case of “internet friction”: Indian people would see no problem with such a behaviour, but one “western” person would be horrified (because this part of the world has largely moved on from those practices).