Hyderabad: The Reserve Bank of India (RBI) is considering new guidelines that would let banks and non-banking financial companies (NBFCs) remotely lock mobile phones purchased on consumer loans when borrowers fail to repay.
According to the 2024 Home Credit Finance Report, one-third of consumer electronics, including mobile phones, are purchased on credit. With 1.16 billion mobile connections in India, the share of financed purchases is increasing.
RBI had earlier stopped lenders from locking phones through apps at the time of issuing loans. Now, by revising the Fair Practices Code, it aims to set clear conditions for when and how such locks may be applied.
RBI remote phone lock plan sparks rights debate
The central bank stressed that lenders must obtain prior consent from customers before locking a device. Access to personal data on a locked phone will remain strictly prohibited. RBI is balancing the demand for faster recovery of small loans with the need to protect consumer rights.
The move is expected to benefit large NBFCs such as Bajaj Finance, DMI Finance, and Cholamandalam Finance. These companies account for a major share of consumer durable loans in India. Nearly 85 per cent of loans under ₹1 lakh from NBFCs are in this category, and defaults remain high.
Consumer rights experts raised concerns that borrowers may face severe disruption. Srikant L., founder of Cashless Consumer, said that people unable to repay will lose access to phones used for jobs, education, and financial services. He warned that the measure could spark intense debate on the balance between recovery powers and consumer protections.