India, May 20 -- The Reserve Bank of India (RBI) has issued amendment directions to revise 'Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents' as part of a wider revamp of loan recovery norms.

The proposed changes include provisions allowing financial institutions like banks, NBFCs, among others, to deploy tech-based mechanisms which restrict or disable some of the functionalities of a financed mobile device such as mobile phone, tablet, etc, to recover loan dues from the borrower in cases of default.

The proposal seeks to formally regulate a practice already being used by some fintech lenders and smartphone financing companies.

According to the draft norms, lenders can impose restrictions only if the...