The Reserve Bank of India has proposed draft rules that would prohibit lenders from remotely disabling borrowers’ devices, such as smartphones, as a tool for debt recovery in digital lending arrangements.
The proposed norms respond to growing concern over lending practices that use installed software to lock phones or restrict functionality when payments are missed. Consumer advocates have argued such measures violate privacy and can disrupt livelihoods for borrowers who depend on mobile connectivity for work and banking.
The RBI’s draft framework would place stricter boundaries on how regulated entities pursue overdue loans, emphasizing fair recovery practices consistent with consumer protection principles. India’s digital lending market expanded rapidly in recent years, bringing both expanded credit access and new enforcement tactics into regulatory focus.
Stakeholders including fintech firms, banks, and consumer groups can submit comments on the draft before final rules are issued. If adopted, the measures would mark a significant step in defining acceptable conduct for lenders operating in India’s increasingly digitized financial ecosystem.
Remote device control emerged as a controversial recovery method among some app-based lenders serving underbanked populations. The central bank’s intervention reflects its broader effort to formalize digital lending standards following earlier guidelines on disclosure, consent, and data handling.
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Sources:
https://entrackr.com/