Now Reading: RBI bars banks from locking devices for loan recovery from January 2027
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RBI bars banks from locking devices for loan recovery from January 2027
RBI bars banks from locking devices for loan recovery from January 2027
The Reserve Bank of India has issued new rules barring banks and NBFCs from locking borrowers' phones, laptops or tablets to recover unpaid loans, effective January 1, 2027. Recovery agents are also…
The Story in Brief
The Reserve Bank of India has issued new rules barring banks and NBFCs from locking borrowers' phones, laptops or tablets to recover unpaid loans, effective January 1, 2027. Recovery agents are also prohibited from accessing personal data, using abusive language, or contacting relatives to intimidate borrowers. The only exception is for loans taken to finance the device itself, and then only after due notice.
Borrowers remain liable for all dues, and the rules do not waive repayment obligations. The RBI has directed lenders to set up systems to address financial distress and explain resolution options. The framework aims to replace intrusive recovery tactics with regulated, transparent processes.
The Indian Opinion
Many will cheer the RBI's move as a check on harassment by recovery agents, and rightly so. But the narrative that this is a 'defaulters' charter' is lazy. The circular explicitly says loan obligations stand. The real test is whether banks now set up genuine hardship desks or find new ways to pressure borrowers outside the rules. Watch how quickly the first complaints about data misuse are actually acted upon.
Sources (2): news.abplive.com, livemint.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
