Smartphone EMI Loan Repayments Under Pressure as Lenders Halt Remote Device Blocking

Defaults on smartphone financing have been climbing steadily after the Reserve Bank of India directed non-bank lenders to discontinue the practice of remotely blocking devices when repayments lapse. 

The shift has exposed underlying stress in this segment, leading to a reassessment of lending strategies and prompting some players to slow disbursements.

Default Levels Rise After Policy Shift

Industry data and lender feedback indicate a consistent increase in missed payments on smartphone EMIs.

Debt collection firms note that delinquencies in this category have been growing each month since the RBI prohibited the use of remote device locking as a recovery tool.

This has brought greater visibility into the true performance of these portfolios.

Lenders Reconsider Risk Controls

Several lenders previously collaborated with smartphone manufacturers, who could disable handsets through embedded software if customers defaulted.

This arrangement raised concerns about the sharing of borrower information with device makers.

With the practice discontinued, lenders must now rely solely on standard recovery processes.

Smartphones Form a Major Part of Consumer Durable Loans

Consumer durable financing remains an important digital lending segment, driven by institutions such as Bajaj Finance, HDB Financial Services, DMI Finance and Cholamandalam Finance.

Smartphones are believed to account for nearly half the overall loan book, given the frequency of upgrades and multi-device households.

While defaults have increased, some lenders believe the issue remains manageable at a portfolio level.

Collections and Portfolio Health

Although the RBI does not publish data solely for smartphone loans, the broader consumer durable loan market has contracted slightly over the past year, reflecting subdued demand and tighter credit norms, as per news reports.

Shift in Lending Approach

Credit bureau insights suggest a year-on-year decline in the number of outstanding durable loans.

Lenders are becoming more selective, focusing on borrowers with stronger repayment histories and prioritising higher-value loans to customers with established creditworthiness.

Read More: Haier seeks Rs 1,000 cr capital boost; files Press Note 3 for India expansion. 

Conclusion

The rise in smartphone loan defaults highlights the sector’s adjustment to regulatory changes and the removal of device-blocking mechanisms. While lenders appear cautious, the broader outlook will depend on how effectively risk controls evolve and how borrowers adapt to the revised recovery environment.

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