RBI- Smartphone EMI Missed? Your Phone Features Could Be Disabled

RBI Rules: Big news for common people. The Reserve Bank of India (RBI) is set to introduce significant changes to smartphone financing and recovery methods. The central bank has released a draft of new guidelines concerning this matter. According to this draft, if a customer buys a mobile phone on credit and fails to pay their EMI, the bank or finance company will have the ability to remotely disable certain features of that phone. Should these regulations be enacted, it would pose a serious challenge for those who default on their loans after acquiring a mobile phone through EMI.

These proposals from the RBI are part of updates to its Responsible Business Conduct Directions. The implementation of these rules is suggested to begin on October 1, 2026. Nevertheless, banks and non-banking financial companies (NBFCs) have been requesting the RBI to permit them to completely lock mobile phones. However, the RBI’s guidelines only permit the disabling of specific features on borrowers’ phones rather than a complete lock.

Applicable only to phones bought on credit

The RBI has also made it clear that the proposed regulations will solely apply to mobile devices acquired through a loan. This indicates that disabling phone features will not be allowed for phones bought outright or through any other financing method. The loan agreement will explicitly outline the conditions under which phone features may be disabled. Additionally, customers will be informed about the step-by-step process for addressing defaults and where they can file complaints.

Actions to be taken after 90 days of default

As per the draft shared by the RBI, banks will adhere to a standard operating procedure (SOP) to ensure that phone features are not disabled arbitrarily. Mobile phone features can only be disabled following this procedure. In instances of loan default, the bank must wait for 60 days. If EMIs are overdue for 60 days, the bank is required to send an initial notice. Following this notice, the customer must be given at least 21 days to respond. Afterward, another notice will be necessary, allowing an additional 7 days.

If the customer still does not make the payment, and the account becomes 90 days overdue, the phone features will be disabled.

Which features will not be disabled?

The RBI has kept consumer safety in mind in its proposed regulations. Therefore, banks will not be able to disable essential services such as the internet, incoming calls, emergency SOS, and government or public safety notifications. Furthermore, the Reserve Bank has strictly mandated a phased approach. This means that phones cannot be disabled without notice and time.

The ban will be lifted within 1 hour

The RBI has also clarified in its draft rules that all restrictions on the phone must be removed within one hour of the customer’s payment of the outstanding amount. If the bank accidentally disables the phone or delays restoring features, the customer will be compensated at the rate of Rs 250 per hour. The RBI also stated that the bank must immediately remove any software limiting the phone’s features upon completion of the loan. Furthermore, the customer retains the right to prepay at any time.

The RBI has introduced stricter rules regarding the behavior of recovery agents. Agents will not be able to contact customers before 8 a.m. and after 7 p.m. Furthermore, abuse, threats, family harassment, or defamation on social media will be strictly prohibited. Banks will be required to preserve the timing, frequency, and conversation recordings of recovery calls for at least six months.