The Reserve Bank of India (RBI) has addressed concerns regarding the potential for lenders to disable mobile phones when borrowers default on loans used to purchase these devices. In a recent statement, the RBI clarified that while lenders may impose some restrictions on phone functionalities, they cannot completely block or disable the device. This policy aims to ensure that essential features, such as internet access and emergency notifications, remain operational for users. According to a 2024 report by Home Credit Finance, the trend of financing mobile phone purchases through loans is increasing in India, where over 1.16 billion mobile connections exist. The RBI also mandates that any restrictions imposed must be reversed within one hour of the borrower rectifying the default, and lenders must compensate borrowers ₹250 (approximately $3 USD) for each hour of wrongful restriction. Furthermore, the RBI emphasizes that banks must avoid harsh recovery practices, including abusive language or excessive communication, and should maintain detailed records of their recovery efforts. This initiative reflects the RBI's commitment to protecting consumers while promoting responsible lending.