Overview
- RBI Governor Sanjay Malhotra said on Oct. 1 that the proposal is under discussion and the central bank is collecting views for and against it.
- Any lock would require explicit prior consent at the time of the loan agreement and must not enable lenders to access or alter personal data on the device.
- The central bank is considering updates to its Fair Practices Code to frame clear rules after previously asking lenders to pause device-locking via loan-linked apps.
- Key mechanics remain undecided, including the number of missed EMIs that would trigger a lock, the warnings and grace periods to be provided, and how disputes would be resolved.
- Lenders point to rising delinquencies on small-value consumer loans, especially for smartphones, while Deputy Governor M. Rajeshwar Rao said the RBI is weighing customer rights alongside creditors’ requirements.