Can banks lock your smartphone for missing an EMI? RBI says yes — but only in these cases
The central bank has prescribed a phased approach to device restrictions. Banks cannot disable or restrict any functionality until the loan account becomes 30 days past due, and only after the borrower has been served notices to repay the outstanding amount.
- Aug 7, 2026,
- Updated Aug 7, 2026 5:45 AM IST
The Reserve Bank of India (RBI) has laid down detailed rules governing when banks can remotely restrict or disable a borrower's smartphone for loan recovery. Under the new framework, such measures can be used only in limited circumstances and are subject to strict safeguards for borrowers. The rules will come into effect from January 1, 2027.
Only for financed devices
The RBI has made it clear that banks cannot use device-locking technology for loans other than those used to finance the concerned mobile device. The mechanism can be deployed only when the borrower has taken a loan to purchase the mobile phone, tablet or laptop that is being restricted. The loan agreement must also expressly and unambiguously permit such action and specify the procedure to be followed.
The device-locking provisions form part of the RBI's broader overhaul of loan recovery norms. Banks will now be required to adopt a comprehensive recovery policy, carry out due diligence before appointing recovery agencies and ensure only certified recovery agents handle borrower interactions. The framework also strengthens oversight of recovery practices and borrower protection.
MUST READ: Rajpal Yadav in fresh trouble: Bank to auction actor's properties over unpaid ₹16.61 crore loan
30-day and 60-day timeline
The central bank has prescribed a phased approach to device restrictions.
Banks cannot disable or restrict any functionality until the loan account becomes 30 days past due, and only after the borrower has been served notices to repay the outstanding amount. After this period, banks may gradually impose restrictions on non-essential functions.
However, the full set of restrictions permitted under the loan agreement can be implemented only after the loan becomes 60 days past due. The RBI has also specified that outgoing calls cannot be blocked before the account is 60 days overdue.
Essential services must remain available
Even when restrictions are imposed, banks cannot block features considered essential for the borrower's safety and livelihood.
According to the RBI, incoming calls, SMS services and emergency SOS functions must continue to work. Banks must also ensure that restrictions do not prevent borrowers from carrying out activities related to their work or employment. Borrowers should also be able to view the status of restrictions imposed on their devices at any time.
MUST READ: RBI tightens loan recovery rules, bars harassment and strengthens borrower protection
Compensation for wrongful restrictions
The RBI has introduced compensation provisions to protect borrowers from wrongful or delayed actions.
If a bank wrongly restricts a financed device or fails to restore full functionality after the borrower clears the dues, it must remove the restrictions within one hour of payment. Where the delay is attributable to the bank, it must compensate the borrower ₹250 per hour, subject to a maximum equal to the amount of the loan disbursed.
The central bank has also barred banks and their technology partners from accessing or using a borrower's personal data—including contacts, messages, call logs, photographs and location history—for loan recovery or any other purpose. Borrowers must also retain the right to prepay the loan, either partially or in full, at any stage.
The Reserve Bank of India (RBI) has laid down detailed rules governing when banks can remotely restrict or disable a borrower's smartphone for loan recovery. Under the new framework, such measures can be used only in limited circumstances and are subject to strict safeguards for borrowers. The rules will come into effect from January 1, 2027.
Only for financed devices
The RBI has made it clear that banks cannot use device-locking technology for loans other than those used to finance the concerned mobile device. The mechanism can be deployed only when the borrower has taken a loan to purchase the mobile phone, tablet or laptop that is being restricted. The loan agreement must also expressly and unambiguously permit such action and specify the procedure to be followed.
The device-locking provisions form part of the RBI's broader overhaul of loan recovery norms. Banks will now be required to adopt a comprehensive recovery policy, carry out due diligence before appointing recovery agencies and ensure only certified recovery agents handle borrower interactions. The framework also strengthens oversight of recovery practices and borrower protection.
MUST READ: Rajpal Yadav in fresh trouble: Bank to auction actor's properties over unpaid ₹16.61 crore loan
30-day and 60-day timeline
The central bank has prescribed a phased approach to device restrictions.
Banks cannot disable or restrict any functionality until the loan account becomes 30 days past due, and only after the borrower has been served notices to repay the outstanding amount. After this period, banks may gradually impose restrictions on non-essential functions.
However, the full set of restrictions permitted under the loan agreement can be implemented only after the loan becomes 60 days past due. The RBI has also specified that outgoing calls cannot be blocked before the account is 60 days overdue.
Essential services must remain available
Even when restrictions are imposed, banks cannot block features considered essential for the borrower's safety and livelihood.
According to the RBI, incoming calls, SMS services and emergency SOS functions must continue to work. Banks must also ensure that restrictions do not prevent borrowers from carrying out activities related to their work or employment. Borrowers should also be able to view the status of restrictions imposed on their devices at any time.
MUST READ: RBI tightens loan recovery rules, bars harassment and strengthens borrower protection
Compensation for wrongful restrictions
The RBI has introduced compensation provisions to protect borrowers from wrongful or delayed actions.
If a bank wrongly restricts a financed device or fails to restore full functionality after the borrower clears the dues, it must remove the restrictions within one hour of payment. Where the delay is attributable to the bank, it must compensate the borrower ₹250 per hour, subject to a maximum equal to the amount of the loan disbursed.
The central bank has also barred banks and their technology partners from accessing or using a borrower's personal data—including contacts, messages, call logs, photographs and location history—for loan recovery or any other purpose. Borrowers must also retain the right to prepay the loan, either partially or in full, at any stage.