Now Reading: RBI bars banks from locking borrowers’ devices for recovery
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RBI bars banks from locking borrowers’ devices for recovery
The Reserve Bank of India has barred commercial banks from restricting a borrower’s mobile phone, tablet or laptop to recover loans, except when the device was financed by the bank. The revised…
The Story in Brief
The Reserve Bank of India has barred commercial banks from restricting a borrower’s mobile phone, tablet or laptop to recover loans, except when the device was financed by the bank. The revised draft directions take effect on January 1, 2027, and exclude small finance banks, payments banks, regional rural banks and local area banks.
If device restrictions are allowed under a clear loan agreement, banks must issue notice and follow a gradual process after missed payments. Incoming calls, SMS, emergency SOS features and work-related access cannot be blocked. Wrongful restrictions or delayed restoration will attract compensation of Rs 250 an hour, capped at the loan amount. Recovery agents will also face tighter rules on disclosure, contact hours, threats, abusive language and public sharing of borrowers’ details.
The Indian Opinion
Claims that the RBI has either banned all digital recovery tools or given banks a free hand are both inaccurate. The draft permits limited locking only for bank-financed devices, with notice, timelines and protected functions. The real test will be enforcement: whether banks restore access within one hour of payment and pay the prescribed Rs 250 an hour when they do not.
Source: newindianexpress.com
This story was synthesised by AI from the source linked above.
