RBI to introduce a new rule! If loan EMIs are not paid, your smartphone, smart TV, and refrigerator will be shut down, and even EVs will be stopped mid-travel.

RBI loan default rule: RBI is considering introducing device locking rules to curb rising defaults on small personal loans. Smartphones and appliances will be remotely locked if EMIs are not paid. The device will be unlocked upon payment of the installment.

RBI loan default rule: If you have a loan for a mobile phone or electronic appliance and do not pay the EMI on time, your phone, refrigerator, or TV may soon be locked. Yes, the Reserve Bank of India (RBI) is preparing to take a major step to tighten its grip on defaulters in response to rising defaults on small personal loans.

Why this move?

Small personal loans (up to ₹1 lakh) have seen a tremendous surge in recent years, especially among customers previously excluded from the formal credit system. Non-Performing Assets (NPAs) have risen sharply on these loans. Default rates are highest among consumers purchasing smartphones and electronic goods. Banks and NBFCs believe that providing the option to lock devices will facilitate recovery.

What's special about the proposal?

According to the RBI proposal, smartphones, refrigerators, TVs, or IoT devices purchased on loan can be remotely locked. This will begin with mobile phones. A third-party app will be installed to lock the device, requiring prior consent from the customer. In the event of a lock, only emergency calls will be accepted. The device will unlock immediately after the installment is paid. However, a reminder notice will be sent to customers before locking.

Who will be affected?

This rule will primarily apply to consumers who have purchased smartphones or household items with personal loans up to ₹1 lakh. Students and young people who are studying or working with phone loans. Rural and urban low-income customers. Missing an EMI can have an immediate impact.

No final decision yet

Currently, the RBI is discussing this proposal with banks, NBFCs, and stakeholders. It has not yet been implemented. Detailed guidelines will be developed to protect consumer interests before a final decision is reached.

FAQs

Q1. When will this new rule be implemented?

This is currently just a proposal. The RBI is discussing it with stakeholders.

Q2. Which devices will be locked?

It will start with mobile phones, and may later include refrigerators, TVs, and other IoT devices.

Q3. Will customer consent be required?

Yes, customer consent will be obtained before installing the device locking app.

Q4. Will the device be unlocked upon payment of EMI?

Yes, the device will be unlocked immediately upon payment of the outstanding EMI.

Q5. Will only the phone be locked, or will data also be deleted?

According to the proposal, only the device will be locked; personal data will not be accessed.