Reserve Bank of India has issued draft rules permitting banks and NBFCs to disable financed mobile phones and tablets if borrowers fail to repay loans. This framework, effective from October 1, 2026, aims to balance lender recovery rights with borrower protection.
Under the proposal, lenders can restrict device usage only if contracts clearly mention this condition. Borrowers must receive two notices before any action: the first after 60 days of default with 21 days to cure, and the second with an additional 7 days. Essential services like internet access, incoming calls, SOS features, and emergency alerts cannot be blocked.
If borrowers clear dues, restrictions must be lifted within one hour. Wrongful blocking or delays will attract compensation of ₹250 per hour. Once loans are fully repaid, disabling technology must be removed. Importantly, lenders cannot access or use borrower data stored on devices.
The RBI also tightened rules for recovery agents. They must be certified, act transparently, and inform borrowers before visits. Contact is allowed only between 8 am and 7 pm unless borrowers agree otherwise. Abusive language, threats, excessive messaging, or public shaming are strictly prohibited. Calls must be recorded and preserved for six months.
These measures aim to ensure fair recovery practices while safeguarding borrower dignity and essential mobile functions.
