RBI directs banks to return property documents within 30 days of loan repayment, penalty for delay

NEW DELHI — Reserve Bank of India (RBI) has issued guidelines for banks related to the release of documents pertaining to movable and immovable property on full repayment of loans by customers.

The guidelines have been issued as it has been noticed that banks follow divergent practices in the release of such documents leading to customer grievances and disputes.

These directions shall be applicable to all cases where the release of original movable or immovable property documents falls due on or after December 1, 2023.

To address such issues and to ensure responsible lending conduct among banks, the RBI in a slew of measures suggested that they shall release all the original movable or immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment or settlement of the loan account.

The borrower shall be given the option of collecting the original movable or immovable property documents either from the banking outlet or branch where the loan account was serviced or any other office of the bank where the documents are available, as per her or his preference.

The timeline and place of return of original movable or immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date.

In order to address the contingent event of the demise of the sole borrower or joint borrowers, the banks shall have a well-laid-out procedure for the return of original movable or immovable property documents to the legal heirs.

Such procedure shall be displayed on the website of the banks along with other similar policies and procedures for customer information.

Also compensation for delay in release of movable or immovable property documents.

In case of delay in releasing original movable or immovable property documents or failure to file charge satisfaction form with the relevant registry beyond 30 days after full repayment or settlement of the loan, the RE shall communicate to the borrower the reasons for such delay.

In the case where the delay is attributable to the bank, it shall compensate the borrower at the rate of INR 5,000 for each day of delay.

In case of loss or damage to original movable or immovable property documents, either in part or in full, the banks shall assist the borrower in obtaining duplicate/certified copies of the movable or immovable property documents and shall bear the associated costs, in addition to paying compensation as indicated above.

However, in such cases, an additional time of 30 days will be available to the banks to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).

Also, the compensation provided under these directions shall be without prejudice to the rights of a borrower to get any other compensation as per any applicable law, the RBI said.

Also read: RBI allows pre-sanctioned credit lines through UPI