The Reserve Bank of India is set to introduce a new rule that will allow lenders to remotely lock the phones of borrowers who default on their loans. This move is intended to strengthen the position of lenders. The new regulation could potentially raise concerns about consumer rights.
Studies indicate a significant portion of consumer electronics, like mobile phones, are bought using loans. In India, with its vast mobile network, a large number of individuals have mobile connections.
The plan involves installing an app on borrowers’ phones when a loan is issued, enabling lenders to lock the device. The RBI is working on updating its Fair Practice Code and issuing guidelines on the phone-locking mechanism. The RBI wants to ensure that lenders can recover their funds while also protecting customer data. The new rule, if implemented, could benefit companies that offer loans for consumer products. Loans under a certain amount are considered to be riskier, according to credit bureaus.