How BBPS and UPI Can Make RBI’s Phone Lock Proposal Fair for Borrowers

The Citizen Advocate Summary: Declaring April 11 as Safe ePay Day

Nayakanti Prashant – Citizen Advocate for Safe ePay Day ✍️

Proposing April 11 as Safe ePay Day to mark UPI’s pilot launch on April 11, 2016, by NPCI with 21 banks, initiated by Dr. Raghuram G. Rajan in Mumbai. This initiative celebrates UPI’s seamless integration of banking and merchant payments.

April 11 – Declare ‘Safe ePay Day’,

Yes, April 11 is vacant in the UN Observance Day calendar

UPI 10^th Birthday -April 11 2026

Small-Ticket Loans in India: From Defaults to 60-Minute Unlocks via PLPL

A) Could your phone be collateral? A look at PLPL, RBI’s phone lock idea, and how BBPS/UPI and a 60-min SLA can protect borrowers in India.

B) India has a chance to make phone-lock lending borrower-friendly with PLPL — transparent branding, BBPS repayments, and fair unlock SLAs.

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When Mobile Phones Become Collateral — An Indian Perspective

 

Introduction

A recent Reuters report suggested that the Reserve Bank of India (RBI) is exploring the idea of allowing lenders to remotely lock financed mobile phones if borrowers default on their loans.

The news has triggered debate: is this a step towards responsible recovery, or a coercive measure that could harm consumers?

My view: India has a unique opportunity to design a customer-friendly Phone-Lock Personal Loan (PLPL) product that balances lender recovery with borrower protection. Done right, this can become a blueprint for the world.

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Why Small-Ticket Loans Are Different in India

Small-ticket loans in India are primarily consumption-driven — financing smartphones, appliances, and other durables. Unlike car or home loans, these don’t create a tangible asset that can be repossessed and resold. Recovery challenges are compounded because many borrowers are either new-to-credit or have low credit scores.

Table 1: Asset-Backed vs Consumption Loans

Feature	Asset-Backed Loan (e.g., Car, Home)	Consumption Loan (e.g., Phone, Appliance)
Collateral value	High, resalable	Low or negligible
Recovery mechanism	Repossession, resale	Limited options
Borrower profile	Established credit history	Often new-to-credit
Default risk	Moderate	Higher

 “In India, a phone is more than a gadget — it’s a gateway to work, payments, education, and identity.”

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The Phone-Lock Personal Loan (PLPL) Concept

If a device-lock feature is embedded in lending, it must be branded upfront. Borrowers should never be caught by surprise.

• Transparency: Product explicitly called Phone-Lock Personal Loan (PLPL).
• Consent: Separate signed/OTP consent for lock/unlock rights.
• Key Facts Statement (KFS): One-page summary with exact lock conditions.

 “If it locks, say it upfront.”

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Disbursement Transparency

Loan disbursement should leave a clear audit trail.

• Bank narration: NBFC | PLPL | Loan No: XXXXX | Phone: 9XXXXXXXXX
• Account Aggregator advantage: Helps spot stacking, avoid over-exposure.
• ₹2 token entry: Proof of lock/unlock, visible in borrower’s statement.

 

 

 

Table 2: Sample Narration Entries

Transaction Type	Sample Narration String	Purpose
Disbursement	NBFC	PLPL
EMI Debit	Loan No: 12345	EMI Debit
Lock Invoked	Loan No: 12345	PHONE LOCKED
Partial Payment	Loan No: 12345	Partial
Unlock (Full)	Loan No: 12345	PHONE UNLOCKED (Full)
Closure	Loan No: 12345	PLPL Loan Closed
Restructure	Loan No: 12345	EMI Rescheduled

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Repayment & Unlock Design

The most critical aspect is speed and fairness.

• Payment rails: BBPS (integrated with UPI, netbanking, cash).
• 60-minute SLA: Unlock within 60 min of repayment. Essentials restored within 5 min on partial pay.
• Partial vs full: ≥30% dues = partial unlock; full repayment = complete unlock.

 “No borrower should wait longer than their next cup of chai for their phone to unlock.”

 

 Table 3: SLA Commitments for PLPL

Payment Type	Repayment Status	Unlock Window	Notes
UPI (BBPS)	Partial ≥30%	Essentials ≤5 min	Instant callback: SMS, UPI, emergency restored
UPI (BBPS)	Full repayment	Full unlock ≤60 min	Automated unlock post-BBPS confirmation
BBPS Cash	Partial ≥30%	Essentials ≤30 min	Dependent on agent reporting, near real-time
BBPS Cash	Full repayment	Full unlock ≤60–90m	Buffer for settlement confirmation
Netbanking/Card	Partial ≥30%	Essentials ≤15 min	Callback slower than UPI but faster than NEFT
Netbanking/Card	Full repayment	Full unlock ≤60 min	Once BBPS confirms, unlock triggered
NEFT/RTGS	Full repayment	Unlock 2–4 hrs	Settlement cycle delay, disclose upfront
Cheque	Full repayment	Unlock next day	Legacy mode; manual clearance, borrower must be informed

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Operational Controls & Governance

A Phone Lock Portal must be mandatory.

• Maker-checker: Collections agent initiates, supervisor approves.
• Phone Lock History: Immutable record of lock/unlock events.
• Customer access: IVR/web portal to check status.
• Audit trail: Available for RBI inspection.

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Responsible Lending Guardrails

• 30% cap: No more than 30% of PLPL portfolio locked.
• SLA compliance: Unlock timelines tracked & disclosed.
• Complaint redress: Disputes resolved within 48 hours.
• Independent audit: Annual certification of lock software.

Hook: “Locking a phone should never mean locking away a livelihood.”

Table 4: Responsible Lending Indicators

Indicator	Target	Purpose
% portfolio under lock	≤30%	Prevents overuse, signals quality
Median unlock time	≤30 min	Faster than SLA cap
Unlocks completed ≤60 min	≥98%	SLA compliance
Essentials restored ≤5 min	≥95%	Protects basic use
Complaint ratio	≤5 per 1,000 loans	Tracks borrower friction
Resolution time	≤48 hours	Quick dispute redress
Disbursement narration compliance	100%	Clear records, no ambiguity
Audit of device software	Annual	Ensures trust & security

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Why This Could Be a Game-Changer

• Credit inclusion: Millions of new-to-credit get formal histories.
• Lower risk: Lenders recover better, NPAs reduce.
• Borrower trust: Fair SLAs make it acceptable.
• Global model: India can export this framework.
• Safe ePay vision: Fits perfectly into secure digital finance narrative.

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Conclusion

India stands at a crossroads.

The technology to lock financed phones already exists, but the question is how to use it responsibly.

By creating a distinct PLPL product, embedding transparency in disbursement, mandating BBPS/UPI for repayments, and guaranteeing a 60-minute unlock SLA, India can balance innovation with fairness.

I look forward to RBI releasing a draft guideline so that stakeholders can refine this further.

— Nayakanti prashant, Citizen Advocate for Safe ePay Day

References:

Hindu Business Line @ https://www.thehindubusinessline.com/money-and-banking/rbi-plans-to-give-lenders-key-power-to-recover-small-loans-sources-say/article70037274.ece

 

MSN @ https://www.msn.com/en-in/money/news/rbi-to-allow-lenders-to-lock-mobile-phones-of-loan-defaulters-details-here/ar-AA1MkIk5

 

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• Appeal for Safe ePay Day 🌟

## Call to Action 

I urge governments, financial institutions, businesses, and communities worldwide to join hands in declaring April 11 as **Safe ePay Day**.

Let’s celebrate UPI’s milestone by making **Safe ePay Day** a global movement for secure, innovative fintech.

Together, we can build a future where financial access is universal, and every e-payment is safe—starting with **Safe ePay Day** in 2026.

 

No Vada Pav, not even one bite,
Till SafeePay Day takes off in flight.
Quirky vow with a Mumbai flair—
Announce the date, and I’ll be there!

 

Disclaimer: - The only Joy is Safe ePayments. Nothing More – Nothing Less.

April 11 – Declare ‘Safe ePay Day’.

Appeal to Declare April 11 as Safe ePay Day

Driven by belief in UPI’s transformative power, this initiative—free of personal gain—aims to celebrate India’s fintech legacy and spark a global movement for secure, inclusive e‑payments.

 

 

Leading BFSI & FinTech Companies Come Together At IAMAI to Form the Largest Fintech Group

          Like it or Dislike it, Financial Technology will dominate the Indian Banking Industry in the years to come.

          Going back to the old fashioned, manual ledgers is not feasible or desirable.

          The volumes of Digital Transactions are on the increase, but lots need to be done, to convince the public that the Digital Transactions channel are safe.

          The higher the trust factor, the higher the volumes. In an idealistic situation, the volumes of Digital Transactions should increase due to internal factors only and not due to external factors.  Volumes dependent on  external factors tend to taper down and are not consistent.

To address the ‘TRUST’, factor IAMAI has brought in Leading BFSI & FinTech companies in a group.

Readers can read here about IAMAI.

IAMAI through Payments Council of India has experience of dealing with Digital Payment Industry. Payment Council of India was founded in 2013 with the main purposes of representing the various regulated non-banking payment industry players, to address and help resolve various industry level issues and barriers which require discussion and action.

Through this new Fintech Group , now IAMAI is brining together BFSI and FinTech companies under one umbrella.

The purpose of the group is to encourage collaboration, seek complementarities and build synergy between leading BFSI companies and the emerging Fintech start-ups.

The group comprises of 60 members from leading banks and technology start-ups including SBI, HDFC, ICICI Bank, IndusInd Bank, Kotak Mahindra Bank, BankBazaar, PolicyBazaar, i-Lend, Faircent, LendingKart, PNB Metlife, ClearTax, CoverFox, Scripbox, Indifi Technologies, Capital Float, Bill Desk, Itz Cash, PayPal, Chillar, Avenues India, MSwipe, among others.

Mrutyunjay Mahapatra,  Managing Director & CIO – State Bank of India, said: “The mandate of the group is to reach out to the last person and bring him into the structure of the entire financial system and create trust and safety, by leveraging technology.” This group represents the following segments - Credit, Payments, P2P Lending, Personal Finance and Technology.

On the need for such a group, Adhil Shetty, CEO – BankBazaar.com, said: "IAMAI Fintech Committee is a unique and important coming together of leading Financial Institutions, innovative FinTech Companies, Information Security Companies, and leading policy organisations. Thanks to IAMAI, all these organisations are collaborating to usher in secure digital financial services. The FinTech Committee will engage with all stakeholders on cashless and paperless financial services, information security and privacy standards, and create awareness of the benefits and security in paperless and cashless digital finance."

Commenting on the formation of the group, Dr Subho Ray, President, IAMAI, said: “Technology is moving fast and principle service providers such as banks and insurance companies need to work together to rapidly reach out and cover the last person and therefore bring efficiency in the system.”

In the next couple of months, the following rollouts will enable the Group to focus on attracting a new set of customers into the Digital Transactions ambit.

Roll-out 01::: Finalisation of the Group Name

Roll-out 02::: A dedicated website

Roll-out 03::: Formation of sub-committees for effective delivery

Roll-out 04::: Conducting Bi-yearly competitions to attract new ideas

Roll-out 05::: Launch of yearly awards amongst various sub-categories

Roll-out 06::: Hold interactive seminars across the nation to increase the trust factor in Digital Transactions

Roll-out 07::: Live data of Digital Transactions on the group’s website i.e eTaal