Phone on EMI: India is one of the largest smartphone markets in the world today. Here millions of people are buying new phones in every budget segment, out of which a large number are of users who take smartphones on EMI i.e. easy installments. Companies also offer attractive discounts on these schemes, but due to this, the risk of increasing outstanding debt has also increased. Now the Reserve Bank of India (RBI) is preparing to bring such a new rule so that the phone of those who do not pay EMI can be locked from a distance.
What is RBI’s new proposal?
According to the report of Reuters, RBI is going to make a big change in its Fair Practices Code soon. Under this proposal, banks and non-banking finance companies (NBFCs) will be able to lock the mobile phones that customers have bought on EMI. That is, if no one has paid installments on time, then the lender company will not let that phone run. However, RBI is currently considering the legal, technical and moral aspects of this system so deeply to implement it in a safe and transparent manner.
Why this rule is considered necessary
This move of RBI is being taken to control the growing non-performing assets (NPA). In India, small loans, especially consumer loans of less than Rs 1 lakh are increasing rapidly and their defaults have also increased. According to the 2024 Home Credit Finance report, EMI cells of electronic items have increased rapidly and their default cases have also increased. In such a situation, this policy will provide security to the lenders so that they do not hesitate to give loans to customers with low credit scores.
How the new system will apply
RBI will amend its Fair Practices Code and decide how the phone will work. It will be mandatory to seek prior consent of customers before giving loan. Banks or NBFC will not reach the personal data of the customer’s phone under any circumstances. The locking feature will only be limited to neutralizing the phone, the data will be safe. In this way this system will be applied as a balanced and transparent process.
How long can this rule come
In 2024, the RBI had stopped loan companies from using such locking apps, as in some cases complaints of their misuse were received. But now after new discussions and consultations, RBI is planning to bring it back this time with strict security rules. Although the official announcement has not been made yet, it is expected that this policy may be applicable in the coming few months.
Which people will affect
If this rule is implemented, then it will have a direct impact on crores of Indians who buy mobile or electronic devices on EMI. India currently has more than 1.16 billion mobile connections on which people’s daily life, work, studies and online transactions depend. This step for lenders can prove to be a way to reduce risk but it is a matter of concern for common users. Many experts say that locking the phone can affect the digital reach of poor or rural consumers and can deepen digital divide.
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