RBI sets 30 day-limit to release property documents after loan closure

Reserve Bank of India (RBI)

The Reserve Bank of India (RBI) issued guidelines for banks, Non-Banking Financial Companies (NBFCs) and other regulated entities to address the issues faced by the borrowers and towards promoting responsible lending conduct among such entities, on Wednesday.

The RBI said that the Regulated Entities (RE) 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.

Furthermore, the borrower will be offered the option of obtaining the original moveable or immovable property documents from the banking outlet or branch where the loan account was serviced, or from any other RE office where the documents are available, whichever he prefers.

To address the possibility of the solo borrower or joint borrowers’ death, the REs must establish a well-defined mechanism for returning original moveable / immovable property documents to the legal heirs. According to the RBI notification, such measures, along with other similar policies and procedures for client information, must be posted on the REs’ websites.

If the RE fails to release original property documents or fails to file charge satisfaction forms with the relevant register within 30 days of loan settlement, the borrower must be informed of the cause for the delay.

The RBI stated that if the delay is attributable to the RE, it must reimburse the borrower at a rate of 5,000 for each day of delay.

Furthermore, in the event that original property documents are lost or damaged, the REs must help the borrower in getting duplicate or certified copies of the property documents and give the corresponding costs in addition to giving compensation.

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However, in such circumstances, the REs will have an additional 30 days to complete this procedure before the delayed period penalty is assessed.

These instructions will apply to all situations in which the release of original property papers is expected on or after December 1, 2023.

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