EMI Will Lock The Phone As Soon As It Misses, RBI Can Bring New Rules

If you buy mobile on EMI (EMI), but are unable to pay EMI on time, then your difficulties may increase. Now the lending companies can lock the mobile if they miss EMI. According to the Reuters report, the Reserve Bank of India (RBI) now plans to make major changes on mobile phone loans. If a customer fails to pay installments by taking a phone loan, banks and finance companies may get the right to lock that phone remotely. This step is being taken to make the recovery of small loans easier, but it can also increase the troubles of consumers. Since mobile phones in India today have become not only a gadget, but an important part of everyday life. In such a situation, if the phone is locked, then people’s work, studies and digital transactions can all be affected.

More than 1.4 billion people live in India and there are more than 1.16 billion mobile connections. It is clear that the use of mobile has become the need of every person. A 2024 study shows that one out of every three mobile phones and other electronics in India are purchased on small loans i.e. This market is very large and the bulk of the earnings of finance companies depend on these loans.

Even earlier, finance companies used to lock phones of customers who did not pay installments. For this, an app was installed in the phone while taking the loan, which would lock the phone when defaulted. But the RBI stopped the practice in 2023–24, as it threatened to violate the privacy and rights of consumers. Now RBI wants to re-implement this system with new rules. In the coming months, RBI Fair may update the Practice Code and release new guidelines on phone locking mechanisms. The following things will be taken care of in the new rules:

• Clear consent (Consent) of the customer will be required before locking the phone.
• After the phone is locked, the bank or lender will not be allowed to access the personal data of the customer i.e. the phone will be closed, but the photos, videos and messages in it will be safe.
• These rules will only apply to phones that will be purchased on loan. This will not affect cash or direct buying customers.

If this rule comes into force then big finance companies like Bajaj Finance, DMI Finance and Chola Mandalam Finance will benefit the most. Recovery of small loans will become easier for these companies and they will also be able to sell on phone loans to customers with weak credit scores. Credit Bureau CRIF Highmark figures show that loans under Rs 1 lakh are the highest risk, as they also have a higher default rate.

Non-banking finance companies (NBFCs) in India account for about 85 percent of consumer durables loans. Especially for mobile phones and electronic goods, the trend of taking loans is increasing rapidly.

However, many organizations related to consumer rights have expressed concern over this proposal. He says that if customers’ phones were locked, it would directly hurt their rights. This practice will weaponize technology. People will lose access to their livelihood, education and financial services until they repay the loan installments.

Overall, if seen, this move of RBI can prove beneficial for finance companies and banks, but the common consumers miss EMI for some reason, then their difficulties can increase, because mobile phones are the essential part of everyone’s life today. And its lock can cut people off from the digital world.

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