WATCH OUT: Your phone can be blocked if you fail to repay EMI

STC NEWS MONITORING DESK
SRINAGAR, SEPTEMBER 12 (STC): Owing to rising levels of bad loans in consumer loan segment, the Reserve Bank of India (RBI) is considering new rules that would allow banks / Financial Institutions to remotely lock mobile phones purchased on credit if borrowers default in their EMI payments.
Under the new guidelines, banks and financial institutions would be required to secure prior consent from borrowers before using any locking mechanism. However, the lenders would not be allowed to access or tamper with personal data on locked devices. “
According to a Reuters report, the RBI wants to ensure that lenders have the power to recover small-ticket loans, and at the same time ensure that customers’ data is protected, quoted a source as saying.
It’s worth mentioning that there has been booming credit demand for consumer electronics, particularly smartphones. According to a 2024 study by Home Credit Finance, more than one-third of electronic goods in India are purchased on credit. With 1.16 billion mobile connections in a nation of 1.4 billion, the scale of the market is vast.
If the new rule is implemented, it could provide a boost to large lenders such as Bajaj Finance, DMI Finance and Cholamandalam Finance, improving recovery rates and expanding lending to customers with weaker credit histories.
However, experts have warned of unintended consequences if this practice comes into effect. “This practice weaponises access to essential technology to enforce behavioral compliance, locking users out of livelihoods, education and financial services until repayment.”
(Straight Talk Communications)