The rules will oblige previous permission from borrowers and prohibit lenders from gaining personal information on locked phones | Photocredit: Francis Mascarenhas
RBI is planning to enable money lenders to lock mobile phones on credit remotely if the borrowers are in default in those loans, according to two sources, in a movement that is aimed at curbing bad assets that will probably cause consumer rights.
More than a third of consumer electronics, including telephones, are purchased on small ticket loans in India, a 2024 study by the credit financing from home. The country of more than 1.4 billion people has more than 1.16 billion mobile connections, according to the Telecom Regulator, which reflects a deep market penetration.
Last year the reserve Bank of India asked for money lenders to stop the lock phones of lovers in default, according to the sources. The practice included the use of an app installed at the time of issuing loans to lock the devices.
After consultation with lenders, the RBI is expected to update its Fair Practices code within a few months, whereby guidelines will be introduced for telephone locking mechanisms, according to the sources.
The rules will oblige previous permission from borrowers and prohibit lenders to access personal information on locked phones, they said.
“The RBI wants to ensure that lenders have the authority to restore small card loans and at the same time ensure that customers are protected,” according to one of the sources.
A spokesperson for the RBI did not immediately respond to a request for comments. The sources refused to be identified because they are not authorized to speak with the media.
If implemented, the measure could go to large consumer korgers such as Bajaj Finance, DMI Finance and Cholamandalam Finance by increasing recovery and relaxing loans to customers with a poor credit.
Loans under 100,000 rupees ($ 1,133) run a greater risk of standard, with some of the highest delinquency rates, according to Credit Bureau CRIF Highmark. Non-banking lenders accounts for 85% of sustainable loans from consumers.
Personal loans are almost a third of the total non-food credit in India’s banking system, according to data from the Central Bank, with those for electronic articles such as telephones that rise rapidly.
Proponents of the consumer warn of potential exploitation of millions if the change is implemented.
“This practice monitors access to essential technology to enforce behavioral conformity, to lock users from resources of existence, education and financial services to reimbursement,” said Srikanth L., founder of Advocacy group Cashlessconsumer.
($ 1 = 88,2510 Indian rupees) (reporting by Gopika Gopakumar; editing by Mrigank Dhaniwala)
Published on September 11, 2025
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