Banks may lock your Mobile if you don’t pay EMI on Time

Banks may lock your Mobile if you don’t pay EMI: Yes, you read it right. Soon Banks will be able to lock your mobile phone if you don’t pay EMI on time.

The Reserve Bank of India (RBI) is considering a rule that could allow bank to remotely lock mobile phones purchased on loan if borrowers miss their EMI payments.

But Why RBI is doing so?

RBI is planning this new move to reduce non-performing assets in the fast-growing consumer finance sector, where millions of Indians buy gadgets and electronics on small-ticket loans. If implemented, it could significantly change how consumer electronics loans are handled in India. India has become the biggest market of smartphones in the World. A lot of users are purchasing mobiles on Loans EMIs. Till here, everything seems to be fine. But the issue is, in recent months, the default percentage on these loans has increased a lot.

A lot of users are not paying EMIs on time. A 2024 analysis by Home Credit Finance highlighted that over one-third of electronics are purchased in India on EMI. Thus, RBI thinks that the risk of Banks and Small lenders should be reduced.

RBI may introduce these new rules but Banks will have to obtain prior consent from borrowers before locking a phone. Moreover, Banks and finance companies will not have access to personal data on the device.

Right now also, some lenders install phone locking and tracking apps to monitor the smartphones. Earlier in 2024, the RBI had asked lenders to stop using phone-locking apps after complaints of misuse. Thereafter, the demand to lock mobile phones grew and RBI is now studying its feasibility.