The Reserve Bank of India has barred banks from disabling borrowers’ mobile phones, tablets and laptops to recover loans, except when the financed device itself serves as loan collateral. The new rules will come into effect from January 1, 2027.
Key Highlights
- RBI prohibits banks from disabling borrowers’ devices for loan recovery.
- Rule applies to mobile phones, tablets and laptops.
- Exception allowed only for devices financed through bank loans.
- Gradual restrictions must be followed instead of immediate device locking.
- Essential functions like calls, SMS and SOS cannot be blocked.
- New regulations become effective from January 1, 2027.
The Reserve Bank of India (RBI) has issued new recovery guidelines prohibiting banks from disabling borrowers’ mobile phones, tablets or laptops to recover unpaid personal, home or vehicle loans. The restriction applies unless the device itself was financed through the lender.
The central bank clarified that lenders can use technology-based restrictions only when the loan was specifically taken to purchase the device. Even in such cases, banks must adopt a gradual approach instead of immediately locking or disabling the device.
RBI also directed that essential mobile functions, including incoming calls, SMS services and emergency SOS features, must remain accessible even if restrictions are applied during the recovery process.
The revised regulations are part of RBI’s broader framework governing loan recovery practices and the engagement of recovery agents. The move follows complaints from borrowers regarding harassment, abusive recovery methods and misuse of technology during loan collection.
The central bank has further mandated that any technology used for device restrictions must be certified by the original equipment manufacturer (OEM) or the operating system provider to ensure security and reliability.
Additionally, RBI instructed banks to ensure that borrowers’ personal information is shared only with authorised employees or recovery agencies to the minimum extent necessary for loan recovery activities.
The new guidelines will come into effect from January 1, 2027, strengthening consumer protection while ensuring responsible recovery practices across the banking sector.
