Under the revised norms, lenders cannot impose any device restriction until a loan is at least 30 days past due and the borrower has been served a formal notice. Between 30 and 60 days past due, lenders can introduce graded restrictions, but outgoing calls cannot be blocked during this period. Full restrictions permitted under the loan agreement can be imposed only after the loan becomes more than 60 days past due.
Also Read: RBI relaxes device-loan recovery norms
The final rules mark a relaxation from the earlier proposal, which had barred lenders from using device-disablement mechanisms until a loan was 90 days past due.
The RBI has, however, retained safeguards for borrowers. Lenders cannot block incoming calls, SMS or emergency SOS functions, and restrictions must not prevent borrowers from using their devices for work or employment-related activities.
Lenders and third-party service providers using such technology must obtain certification from the device’s original equipment manufacturer (OEM) or operating system platform, where available. They are also prohibited from accessing personal information stored on the device, including contacts, SMS, call logs, photographs and location history.
Once dues are paid, restrictions must be reversed within one hour. If a borrower faces wrongful restrictions or a delay in restoring device functionality attributable to the lender, the lender must pay compensation of ₹250 per hour, capped at the amount of the loan disbursed.The RBI has also relaxed disclosure requirements for recovery agents. Instead of requiring banks and other covered entities to publicly disclose detailed information about individual recovery agents on their websites, the final framework requires them to publish an updated list of recovery agencies they have engaged or empanelled.
The change follows industry concerns over the high attrition among recovery personnel and the operational difficulty of maintaining updated details of individual agents.
Also Read: RBI bars banks from disabling mobile devices of defaulting borrowers
The RBI has also pushed back the implementation date of the revised norms to January 1, 2027, from October 1, 2026. It has provided a one-year window from the effective date for already engaged recovery agents who do not hold the required certification from the Indian Institute of Banking and Finance (IIBF) to obtain it.
However, the RBI has retained the requirement that recovery agents must be certified before interacting with borrowers for recovery-related activities.
(With inputs from TOI)