Mumbai. Banks will now be able to lock the phones of those who have taken phones on loan from banks but do not repay the loan. For this, the Reserve Bank of India (RBI) has issued guidelines on Thursday which will be applicable from January 01, 2027. The central bank today issued amendments to the rules regarding loan recovery for banks, non-banking financial companies (NBFCs) and other regulated entities providing financial services.
This includes tablets and laptops in addition to mobile phones. It states that any bank, NBFC, or other regulated lending entity, either on its own or through a third-party service provider, may use such technology-based systems only if the borrower has taken a loan from them to purchase these devices.
Action will begin after 30 days
The RBI has stated that banks can initiate the gradual deactivation of mobile, tablet, or laptop features only if the EMI payment is not paid 30 days after the due date. Furthermore, outgoing calls can only be disabled after 60 days of default. Incoming calls, SMS, and emergency services will not be disabled.
Employment should not be affected.
The amended rules also state that restrictions imposed should not prevent the borrower from engaging in work or employment-related activities. Banks must remove all restrictions within one hour of the borrower’s payment of the outstanding balance. If restrictions were imposed incorrectly or there was a delay in removing the restrictions after payment was received, and the bank is responsible for this, the bank will compensate the borrower at a rate of ₹250 per hour until the restrictions are lifted. However, the total compensation will not exceed the loan amount disbursed by the bank. Upon full repayment of the loan, the bank will immediately remove or deactivate any technical controls placed on the device. If the borrower needs to remove the technical controls from the mobile phone, the bank will explain the process.
The bank is responsible for data security
The RBI stated that the borrower will have the right to partially or fully prepay the loan at any time. It also directed banks to establish a robust grievance redressal system to address delays or other problems in unlocking the mobile device’s functionality. The bank will also be responsible for protecting personal data on the locked device, including contact lists, SMS messages, call logs, photos, location history, and other personal information. The central bank also stated that this data cannot be used for debt recovery or any other purpose.