India, June 4 -- justify;">On 20th May 2026, the RBI issued a draft circular amending the directions on the conduct of banks in the recovery of loans and the engagement of recovery agents. The amendments provide for enabling banks to deploy technology-based mechanisms that restrict or disable certain functionalities of a mobile device purchased through a loan. Restrictions or the disablement can be deployed to recover loan dues from a borrower in the event of a loan default. In this article, we will understand the circumstances in which a lender can deploy these mechanisms.

If a borrower has bought an electronic device, such as a mobile phone or tablet, on a loan, and has defaulted on repayment, bank can take the possession of the device...