Missing an EMI payment for a loan will no longer allow banks to freely disable or lock your mobile phone, laptop or tablet.
The Reserve Bank of India (RBI) has issued new guidelines restricting the use of technology-based device controls by lenders during loan recovery.
Under the new rules, banks can use such restrictions only when the loan was specifically taken to purchase that particular device.
The guidelines will come into effect from January 1, 2027.
Banks Cannot Disable Devices for Regular Loan Defaults
The RBI has made it clear that banks cannot lock or disable a borrower’s device if the default is related to other types of loans.
For example, a person who misses payments on a personal loan, home loan or car loan cannot have their mobile phone, tablet or laptop remotely disabled by the bank.
Device restrictions will only be allowed when the lender has financed the purchase of that specific device.
Even in such cases, banks cannot immediately block access after a missed payment.
Banks Must Follow a Step-by-Step Recovery Process
The RBI has instructed banks to follow a gradual approach before restricting any financed device.
Lenders cannot impose restrictions as the first step after a borrower misses an EMI.
The regulator said that if a device was purchased through a loan provided by the bank, restrictions may be considered, but banks must avoid immediate disablement.
This move aims to prevent harsh recovery practices and ensure borrowers get fair treatment.
Essential Phone Features Cannot Be Blocked
Even if a financed device is restricted, some basic features must continue to work.
Banks will not be allowed to block essential services such as:
Incoming calls
SMS services
Emergency SOS features
This will ensure that borrowers can still access important communication and emergency services.
Only Approved Technology Can Be Used
The RBI has also introduced safeguards regarding the technology used for device restrictions.
Any software or system used to control a financed device must be certified by the original equipment manufacturer (OEM) or the operating system platform.
Banks and third-party service providers using such technology will also need proper certification.
The aim is to prevent the use of unsafe, unreliable or unauthorised software for loan recovery.
RBI Tightens Rules for Recovery Agents
Along with device restrictions, the RBI has also strengthened rules for loan recovery agents.
Banks must ensure that borrower and guarantor information shared with recovery teams is limited only to what is necessary for recovery work.
The move comes after complaints about borrowers facing harassment during loan recovery, including abusive communication and pressure through social media.
The RBI has again reminded banks that recovery practices must be fair, transparent and respectful, while protecting borrowers’ rights.