Mumbai | October 1, 2025 – Imagine missing an EMI on your new smartphone and suddenly finding the device locked. Sounds scary, right? Well, the Reserve Bank of India (RBI) is actually considering such a move.
RBI Governor Sanjay Malhotra on Wednesday said the proposal to allow lenders to remotely lock smartphones in case of EMI defaults is “under consideration.” The idea has sparked a huge debate between consumer rights advocates and lenders.
What RBI Said
When asked directly if banks would be allowed to lock phones bought on installments, Malhotra was careful with his words.
“Our main objective is to protect consumer rights and data privacy. At the same time, we will see how lenders’ interests can be safeguarded,” the RBI chief said after the Monetary Policy Committee (MPC) meeting.
Deputy Governor M. Rajeshwar Rao added that the central bank is weighing the pros and cons. “There are issues around customer rights, data privacy, and creditors’ requirements. We’re examining them and will decide at the appropriate time,” he said.
Why This Idea Came Up
India loves buying gadgets on EMIs. According to a Reuters report, about one-third of consumer electronics—especially smartphones—are purchased this way. But the problem? Default rates on small-ticket loans have been climbing fast.
To deal with this, some lenders pushed the idea of a “device lock app” that could disable a smartphone if EMIs aren’t paid. Experts say this could curb willful defaults, though it would require borrowers’ explicit consent at the time of signing the loan agreement.
The Legal Grey Area
Here’s where it gets tricky: current laws don’t clearly allow lenders to lock customer devices. In fact, the RBI stopped such practices last year. That’s why, if the central bank brings this back, it would likely happen through an update to the Fair Practices Code in the coming months.
What Experts Think
Consumer advocates worry this could go too far, especially if data privacy and misuse risks aren’t tightly controlled. On the other hand, lenders argue that without stricter measures, default rates will only rise.
For now, the RBI hasn’t taken a final call. But if the proposal gets a green light, missing EMIs could literally put your smartphone on lockdown until dues are cleared.
