The Reserve Bank of India has prohibited banks and regulated entities from disabling or restricting borrowers’ mobile phones, tablets, or laptops as a loan recovery method, except when the loan was specifically taken to finance the device. These updated guidelines will take effect from January 1, 2027, and form part of the central bank’s revised framework on loan recovery and engagement of recovery agents, according to inc42.com.
Under the new rules, lenders cannot use technology-based restrictions on devices to recover dues from personal, home, vehicle, or other loans unrelated to the device. However, if the loan was taken to finance the device itself, lenders may deploy device-locking mechanisms but must follow strict safeguards. The RBI also requires a graduated approach, ensuring essential functions such as incoming calls, SMS, emergency SOS, and government notifications remain accessible during any restriction.
The central bank has mandated that lenders and third-party service providers offering device-locking solutions obtain certification from the device’s original equipment manufacturer (OEM) or the operating system platform before implementing such technology. Additionally, lenders must limit borrower or guarantor information shared with employees or recovery agencies to only what is necessary for recovery activities. This move aims to balance borrower protection with lenders’ rights in loan recovery.
The RBI’s updated framework will come into force on January 1, 2027, marking a significant regulatory step in governing technology use in loan recovery and protecting borrower device access, inc42.com reported.