The Reserve Bank of India (RBI) has issued new rules for buyers of smartphones, tablets, or laptops purchased on an installment plan (EMI). Under these rules, if a credit-financed device is not unblocked in a timely manner after debt repayment, the bank or regulated entity may be obligated to pay compensation of 250 rupees for every hour.
This new regulation will come into effect on January 1, 2027. The RBI adopted this measure against the backdrop of a growing number of cases of remote blocking of EMI-financed devices following loan defaults. The central bank emphasizes that creditors have the right to demand debt repayment, but technology should not be used to exert undue pressure on customers or as an improper collection method.
According to the RBI, remote blocking can only be applied to devices whose purchase was directly linked to obtaining a specific loan. That is, if a person took out a consumer loan or any other loan not directly tied to the purchase of a smartphone, tablet, or laptop, such a device cannot be remotely blocked for debt recovery purposes.
The RBI has established a specific procedure for restricting access to the device. Remote blocking cannot occur immediately after an EMI default arises. Blocking can only begin after the relevant credit account has been overdue for at least 30 days. Full device blocking is permitted only after 60 days of delinquency. The RBI has instructed creditors to apply restrictions incrementally instead of completely disabling the device from the outset.
Even after applying remote blocking, some vital functions of the device must remain accessible. These include incoming calls, SMS, and emergency communication services such as SOS. Furthermore, functions necessary for work or employment cannot be disabled. The goal is to ensure that the borrower is not completely cut off from communication and essential work functions even when there are delays in EMI payments.
The new RBI framework also places great emphasis on borrower privacy. During device blocking, the bank or creditor cannot access the contact list, photos, videos, messages, call logs, location history, or any other personal data. Thus, device blocking technology must be used exclusively for debt recovery and must not provide access to the client's personal data.
When approving a loan, the creditor is obliged to provide the client with clear information that remote device blocking may be applied in case of EMI non-payment. Before applying the block, the creditor must notify the borrower. This allows the client to know in advance what actions may be taken in case of failure to meet obligations.
If the borrower fully repays the outstanding amount, the creditor must remove the block from the device. If the device is not unblocked in a timely manner after payment is made, the bank or regulated entity may be liable for compensation under the new RBI regulations. The aim of the new rules is to strike a balance between the right to debt recovery and the interests of the client.
