Mumbai: The Reserve Bank of India (RBI) has introduced new rules to protect borrowers from unfair loan recovery practices. The rules will come into effect from January 1, 2027.
Banks, NBFCs, housing finance companies and other RBI-regulated lenders will have to follow these guidelines while recovering loans.
Phone Lock Rules
A lender cannot remotely lock your personal mobile phone, tablet or laptop simply because you have failed to repay a loan.
However, there is an exception. If the loan was specifically taken to buy that particular device, the lender may restrict some features under certain conditions.
Such restrictions must be clearly mentioned in the loan agreement and the borrower must receive prior notice.
30-Day Protection
A phone cannot be restricted immediately after one missed EMI. The loan must remain overdue for at least 30 days despite notice to the borrower.
Even then, only some non-essential features can initially be restricted.
Full restrictions permitted under the agreement can be imposed only after the loan remains overdue for at least 60 days.
Incoming calls, SMS and emergency SOS services must always remain available.
Data Stays Private
Banks and finance companies cannot access personal information stored on the device.
This includes contacts, messages, photographs, call history and location history. Restrictions should also not prevent borrowers from carrying out essential work or employment.
Once overdue payments are cleared, restricted features must be restored within one hour.
If a lender wrongly restricts a device or delays restoring services without the borrower’s fault, compensation of ₹250 per hour may apply, subject to the prescribed limit.
Recovery Timings
Recovery agents can normally contact borrowers and guarantors only between 8 am and 7 pm.
Agents cannot threaten, abuse or repeatedly harass borrowers. They cannot publicly shame customers or share their private information on social media.
Before the first home visit, borrowers must generally be informed at least one day in advance. Recovery agents must also carry proper identification and authorisation.
The RBI rules make one point clear: borrowers must repay their loans, but lenders cannot use threats, harassment or unfair digital restrictions to recover money.
