Rising repayment delays in smartphone EMIs are launchning to surface sharply, with lfinishers reporting a steady climb in defaults ever since the Reserve Bank of India (RBI) barred non-banking financiers from remotely blocking devices of borrowers who miss payments. Industest executives state the relocate has exposed the true stress in smartphone loan portfolios.“Ever since the RBI has clamped down on practices like device blocking for defaulting borrowers, the underlying health of portfolios has started to surface more clearly. We are already seeing a 20% month-on-month rise in delinquencies in the smartphone financing category,” Ananth Shroff, founder of Bengaluru-based debt collections startup DPD Zero declared, ET reported.Although the RBI halted the practice late last year, governor Sanjay Malhotra declared during the October 2025 monetary policy press conference that the central bank was still assessing the mechanism and “seeing into its pros and cons”.Lfinishers that were heavily exposed to smartphone financing have scaled back fresh disbursals sharply as defaults rise, according to the founder of another debt collections startup, who spoke on condition of anonymity. Smartphone loans form a large part of the consumer durable segment, with industest estimates suggesting that nearly 50% of the category’s loan book consists of mobile phones—largely becautilize they are purchased more frequently and often for multiple family members.Consumer durable loans are unsecured, but many lfinishers mark a lien on the device at the time of purchase. Earlier, lfinishers partnered with smartphone manufacturers, who would utilize an in-built app to block the device after a default, an industest executive explained. However, the data-sharing involved in triggering a manufacturer-led block raised concerns. “The concern here was around how a lfinisher is sharing data around customer default to an OEM (manufacturer), since device locking can only be done by the manufacturer and not the lfinisher,” a Mumbai-based digital lfinishing startup founder notified ET.Despite the recent spike in defaults, industest leaders state the situation is manageable. The Mumbai-based founder noted that the rise is not systemic and can be addressed at the portfolio level.“People do not acquire refrigerators or television sets frequently, but smartphones are a common purchase and meant for multiple members of the family, hence this is a very huge category,” he declared. A senior executive at a non-banking finance company added that 95% of overdue accounts are typically resolved through tele-calling, and collection agencies mostly deal only with loans overdue beyond 90 days or already classified as NPAs.While the RBI does not release smartphone-specific loan data, the broader consumer durable segment is displaying signs of cooling. As of September 19, outstanding consumer durable loans stood at Rs 22,279 crore, down from Rs 23,264 crore a year earlier. Credit bureau Crif Highmark also reported a 4.7% year-on-year decline, with outstanding consumer durable loans falling to 95.5 million in the September quarter of FY26.
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