Release Property Documents Within 30 Days Of Loan Repayment Or Face Fine: RBI To Banks, NBFCs
The Reserve Bank of India (RBI) has introduced new guidelines to ensure responsible lending conduct and address customer grievances regarding the release of movable and immovable property documents upon full repayment or settlement of personal loans within 30 days. These directives are aimed at standardising practices among Regulated Entities (REs) and preventing disputes arising from varying procedures.
According to the guidelines, REs must release all original movable and immovable property documents, and clear any charges registered with registries, within 30 days of the complete repayment or settlement of a loan account. Borrowers will have the flexibility to collect these original documents either from the branch where the loan account was serviced or from any other office of the RE where the documents are available. Loan sanction letters issued after the effective date will specify the timeline and location for the return of original documents.
Additionally, in cases of the demise of the sole or joint borrowers, REs are required to have a well-defined procedure for the transfer of original documents to legal heirs, which will be made accessible on the REs' websites along with other relevant policies. In the event of a delay in releasing the original documents or failure to file a charge satisfaction form with the relevant registry beyond 30 days after full repayment, REs are obligated to inform the borrower of the reasons for the delay and provide compensation at a rate of Rs 5,000 per day if the delay is attributable to the RE.
In cases of loss or damage to original documents, REs will assist the borrower in obtaining duplicate or certified copies, bearing the associated costs, and providing compensation. These directions, effective from December 1, 2023, apply to all cases where the release of original movable and immovable property documents is due and have been issued under sections 21, 35A, and 56 of the Banking Regulation Act, 1949, sections 45JA and 45L of the Reserve Bank of India Act, 1934, and section 30A of the National Housing Bank Act, 1987. This move is expected to streamline procedures and ensure greater transparency in lending practices.
