The Reserve Bank of India (RBI) has introduced revised draft directions that could empower lenders to disable certain functionalities on financed smartphones and tablets if borrowers miss their equated monthly installments (EMIs). This proposal, released on May 20, 2026, follows extensive feedback from banks and non-banking financial companies (NBFCs), emphasizing the need for technology in loan recovery. The RBI noted that the feedback highlighted the potential for technology-based mechanisms to restrict device functionalities as a recovery tool. This initiative is particularly pertinent in India's rapidly expanding buy-now-pay-later and consumer electronics financing markets, where millions of smartphones are acquired on EMIs annually. While proponents argue that such measures could mitigate defaults, critics warn that restricting access to devices could impede communication, banking, and emergency services. The RBI clarified that the draft is open for public consultation, indicating that safeguards will be implemented to protect borrower rights. This development could significantly impact fintech companies and consumers reliant on EMI-based purchases, as it raises questions about the balance between effective loan recovery and consumer rights.