India’s central bank on Wednesday proposed allowing lenders to remotely restrict or disable functions of a mobile phone or tablet bought on credit in cases of default in loans used to finance the device.India is one of the largest mobile phone markets in the world with more than 1.16 billion mobile connections, according to the telecom regulator, reflecting deep market penetration.
Over one-third of consumer electronics, including phones, are purchased on small-ticket loans in India, a 2024 study by Home Credit Finance showed.
According to the proposed rules, restrictions on functions of the devices can be imposed only after a loan becomes overdue for 90 days, following a staged notice process.Borrowers must first receive a notice after 60 days past due, with 21 days to repay, followed by a second notice allowing at least another week, RBI said.
Lenders can impose these restrictions only if they have sought consent from customers in loan contracts.Reuters was the first to report last year RBI’s plans to allow lenders to lock smartphones as a tool to recover loans, and that the move may raise consumer rights and privacy concerns.Essential services such as internet access, incoming calls, emergency SOS features and government alerts cannot be blocked, the central bank said.Restrictions must be reversed within one hour of repayment, failing which customers would be liable to an hourly 250 rupees ($2.58) compensation, RBI said.Lenders will be prohibited from accessing personal data on locked phones, RBI said.The latest proposal follows industry feedback on a February draft tightening rules for loan recovery agents and will be open for public comments until May 31.
Source link
