A typical high-end phone today can set you back by around ₹1 lakh or more. It is the kind of price you paid few years back for a high-end digital television or for a high-end refrigerator. Today, it is the kind of money you shell out just for a smartphone. Most of the buyers of such smartphones are young people, so that means, much of the buying is being done in instalments. That has not only created a problem of unnecessary debt, but also of slippery customers for banks.

When a house or car is funded, the asset is much easier to track due to the size of the asset. That is not the case in a smartphone. In most cases, the smart phone is too difficult to track. When the funds are tight in the market, you find a rise in default rates. That is when it is a big challenge for the banks and NBFCs to track down such customers who take loans to buy smart phones. To address this problem, the RBI is likely to allow these lenders to remotely lock such mobile phones,  where there is default on EMIs. However, as per extant rules, the phones can only be locked by the lender after taking consent of the user. 

The whole problem today is the way consumer goods are funded and people with a stable job can easily get a loan from a lender. Logically it is strange, but it is possible for a person to buy smart phones that cost over 4 times their monthly salaries. In all these peripheral cases, the defaults are naturally high. It is also not going to help if the lender has to take prior consent of the smart phone buyer before locking the phone. That would be practically very difficult to implement. The real issue is why people need to buy phones they cannot afford, because that is what leads to defaults in the first place. It is easy credit and very aggressive selling that is the problem.  

One of the key issues that RBI has to address is the security issue. If the bank or lender has to gain access to the phone and stop the usage of the phone, they are also going to get access to the confidential data like phone book, chats, conversations, messages, Google Map history, transaction history etc. Many of these are very confidential data and can seriously compromise the safety and the security of the borrower and families. We have already seen misuse of phone data on a large scale by loan sharks in India, disguised as NBFCs. RBI giving access to phone lock raises very major security issues. It is more important to lock the habit, than lock the phones!