EMI phone buy: One of the biggest smartphone markets in the world right now is India. A large number of the millions of individuals buying new phones in every price range are those who buy smartphones on EMI.
EMI phones: One of the top smartphone markets in the world right now is India. A significant number of the millions of individuals buying new phones in every price range are those who buy smartphones on EMI. Companies provide alluring discounts on such schemes, but this has additionally led to the likelihood of bad loans growing. Right now, the Reserve Bank of India (RBI) is getting ready to implement a fresh rule that will enable the remote locking of phones belonging to non-EMI payers.
What is the new idea from the RBI?
A Reuters story says that the RBI would shortly amend its Fair Practices Code greatly. Banks and non-banking financing companies (NBFCs) will have the ability to remotely freeze cell phones that customers have bought on EMI under this proposal. This implies that the lender can limit the phone if an applicant does not make their monthly payments on time. For its safe and open deployment, the RBI is now carefully reviewing the system’s ethical, technical, and legal aspects.
Why this rule was believed to be necessary
The RBI is taking this action in an effort to curb the growing amount of non-performing assets (NPAs). In India, small loans—particularly those for consumers under ₹1 lakh—are expanding swiftly, and defaults have also gone up. The 2024 Home Credit Finance Report states that both defaults and EMI sales of electronic goods have surged. The law will give lenders security in such a scenario, enabling them to make loans without hesitation, even to borrowers with poor credit scores.
How is the new system going to be put into place?
To decide how phone lockout technology would operate, the RBI will make changes to its Fair Practices Code. Prior to offering loans, clients’ approval will have to be obtained. Under no circumstances will banks or NBFCs have access to personal information on customers’ phones. To protect data, the locking feature will only be used to deactivate the phone. This system will be put into place in a fair and open manner.
When will this rule be put into effect?
Citing concerns over abuse, the RBI prohibited lending companies from use these locking apps in 2024. The RBI, however, intends to reintroduce them with more stringent security regulations following fresh talks and consultations. While there has not been a formal announcement yet, this policy is anticipated to go into effect in the upcoming months.
Who is going to be impacted?
Millions of Indians who buy cell phones or other electrical goods on EMI will be directly impacted if this law is put into effect. Currently, there are more than 1.16 billion mobile connections in India, which are essential for people’s daily activities, work, schooling, and online shopping. This action raises concerns for regular users even though it might be a risk-reduction strategy for lenders. among many experts, locking phones may affect impoverished or rural users’ access to the internet and worsen the digital divide.