MUMBAI: Banks may be allowed to block phones and disable other electronic devices bought on loan, in case the borrower defaults, the Reserve Bank of India (RBI) said in its second draft guidelines on loan recovery, released on Wednesday.
However, RBI clarified that banks cannot restrict the mobile phones of defaulting borrowers to recover personal, car, or home loans.
According to the proposed norms, banks can restrict devices bought on loan if the dues are pending for more than 90 days and recovery notices have been served on time. Also, such an action may be taken only if the loan contract “expressly and unambiguously permits” it, the draft proposal noted.
Restricting the targeted phones or devices could be done by deploying any technology-based mechanism. However, the bank cannot restrict essential functionalities such as access to internet, incoming calls, emergency SOS features, and receipt of emergency government notifications.
Also, the restrictions must be listed within one hour of the borrower curing the default.
The draft proposal also specifies conduct rules for recovery personnel. The guidelines say recovery calls and visits will be allowed only between 8 am and 7 pm, and agents will be barred from using intimidation, abusive language, public humiliation, social media shaming, or excessive calling.
New norms to kick in from October 1
The draft guidelines categorically state that banks may resort to disabling electronic devices only if the loan agreement has such a clause. RBI will accept public feedback till May 31 and proposes to implement the norms from October 1, 2026