RBI New Rule: RBI is planning a new rule where loan default on smartphones, TVs, or fridges could lead to device lock. The move aims to curb rising small loan NPAs.
The Reserve Bank of India (RBI) is preparing a major step to tackle increasing loan defaults on smartphones and electronic appliances. Under the proposal, banks and NBFCs may get the power to remotely lock devices if EMIs are not paid on time. This plan is still under discussion but could soon impact lakhs of borrowers.
RBI May Lock Phones, TVs, and Fridges of Loan Defaulters
If you buy a smartphone, TV, or refrigerator on loan and fail to pay your EMI, your device could soon be locked. The Reserve Bank of India (RBI) is considering a new move to deal with rising defaults on small personal loans. This step is expected to tighten monitoring and improve recovery for banks and NBFCs.
Why is RBI Taking This Step?
In recent years, personal loans of up to ₹1 lakh have become very popular, especially among first-time borrowers outside the formal credit system. But defaults have also increased sharply, turning many into Non-Performing Assets (NPAs). Electronics such as smartphones and appliances top the list of unpaid loans. To address this, lenders believe that having the option to remotely lock devices will act as a strong deterrent and push customers to repay on time.
How Will It Work?
As per the proposal, devices like smartphones, televisions, refrigerators, or IoT gadgets bought on loan can be locked remotely. The plan will initially start with mobile phones. For this, a third-party app will be pre-installed with customer consent. If the borrower misses an EMI, the phone can be restricted for use except emergency calls. Once the due amount is paid, the lock will be lifted instantly. Borrowers will also receive prior reminders before any action is taken.
Who Will Be Impacted?
The rule mainly targets borrowers of small-ticket loans under ₹1 lakh, including students, young professionals, and low-income customers in rural and urban areas. Missing even a single EMI could mean losing access to daily-use devices.
Still Under Discussion
The RBI has not yet finalized the move. Discussions with banks, NBFCs, and other stakeholders are ongoing. Before rolling it out, detailed guidelines will be issued to safeguard consumer rights.
