- The RBI clarified lenders cannot block or disable phones for unpaid mobile loans
- Banks may restrict phone features but cannot fully disable the device for loan defaults
- Restrictions apply only to loans taken specifically for purchasing mobile phones
The Reserve Bank of India (RBI) on Wednesday clarified that lenders cannot block or disable mobile phones in case of loans taken for buying the device are not paid back.
The banking sector regulator, in its draft amendment directions, said banks are permitted to take certain steps to restrict mobile phone features if the loan dues are not cleared. However, completely blocking or disabling the phone is prohibited, it clarified.
Notably, these restrictions apply only for loans taken specifically to buy mobile phones, and are not related to borrowings for other purposes.
As per the directions, Banks must also provide a notice to the borrower after their mobile loan becomes overdue for more than 60 days. They must further provide 21 days to the borrower to cure their defaulting on the loan.
Banks will also be prohibited from obtaining data stored in the borrower's cell phone in order to undertake loan recovery under these norms. They further stated that bank employees and recovery agents are permitted to the visit borrower or guarantor only between the timings of 8 a.m.-7 p.m. Bank employees and recovery agents will also be banned from using threatening or abusive language. Intimidating, harassing or humiliating the borrower or guarantor as well as their relatives will not be acceptable. The use of violence, threatening the borrower or guarantor's family's reputation will also be disallowed. The RBI is seeking public feedback on Tthese proposed recovery norms by May 31.
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