RBI New Rule 2025 Phone Lock Loan Recovery: Reserve Bank of India (Rbi) Consumer is preparing to implement the new rule regarding loan and recovery process. According to the proposed rules, if a borrower fails to repay the loan on time, the lenders will be able to lock his mobile phone from a distance. This step is being considered to increase the strength of lenders, although concerns about consumer rights have also intensified.
Why is this rule important?
According to the 2024 report of the Home Credit Finance, consumer electronics in India, especially mobile phones, are purchased on loans in more than one third of cases. At the same time, data from telecom regulator shows that the country has more than 1.16 billion mobile connections as compared to a population of 1.4 billion. In such a situation, it has become important for companies to take strict steps regarding loan recovery.
The phone will be locked, but the data will be safe
Sources say that last year the RBI directed the lenders to stop the customers from locking the phone. However, while issuing the loan under the new system, special app will be installed in the borrower’s phone, which will provide the facility to lock the phone in the event of default.
RBI’s plan will work at two levels:
- The lender gets strong right to loan recovery.
- Private data of customers stay safe.
According to the Economic Times report, the RBI may soon issue guidelines on phone-locking mechanism by updating the Fair Practice Code.
Which companies will benefit?
If this rule applies, companies like Bajaj Finance, DMI Finance and Cholamandalam Finance will get the most benefits. The large part of these companies is in giving small loans on consumer products. According to the Credit Bureau CRIF Himark, loans less than Rs 1 lakh are considered to be the highest risk. In such a situation, phone-locking mechanism can make loan recovery easier and reduce the default rate.
Note
While this move of RBI will strengthen financial institutions, the debate on the rights and digital freedom of consumers will also intensify. Now it remains to be seen how the balance will be maintained when the new rule is implemented.
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