Commercial Banks (India-wide)

The RBI issued a new framework governing loan recovery practices related to EMI defaults, specifically addressing device-locking by banks. Under the rules, banks cannot arbitrarily lock a phone or other device for missed EMI payments; if a device EMI remains overdue for more than 60 days, the bank must issue a notice giving at least 21 days to pay, followed by a second notice of at least 7 additional days before further action. The framework also prohibits recovery agents from threatening, harassing, or disclosing customer information on social media, and banks cannot disable essential device functions such as incoming calls, SMS, or emergency SOS. The instructions apply to commercial banks but exclude small finance banks, payment banks, regional rural banks, and local area banks. This is relevant to the BaaS ecosystem as device-financing and EMI-based lending are common in fintech-bank partnership models in India.

Verified from source: RBI issued rules governing EMI default recovery practices, specifying that banks cannot immediately lock phones/devices upon missed EMI payments. The rules establish notice periods, timelines, and required procedures before device restrictions can be imposed, and set deadlines for reactivating devices after payment is made.