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MUMBAI: The Reserve Bank of India (RBI) has issued guidelines to banks regarding the release of documents related to movable and immovable property upon full repayment of loans by customers. These guidelines have been introduced to address discrepancies in the practices followed by banks, which have led to customer grievances and disputes.
These directives apply to cases where the release of original movable or immovable property documents is scheduled on or after December 1, 2023. To promote responsible lending conduct among banks and address these issues, the RBI has outlined several measures:
*Banks must release all original movable or immovable property documents and remove registered charges within 30 days after full loan repayment or settlement.
*Borrowers can choose to collect the original documents from the bank’s outlet or branch where the loan account was serviced or from any other bank office where the documents are available, based on their preference.
*The loan sanction letters issued after the effective date will specify the timeline and location for returning the original documents.
* Banks should have a defined procedure for returning original documents to the legal heirs in case of the sole borrower’s or joint borrowers’ demise. This procedure must be made available on the bank’s website for customer information.
*Compensation will be provided for delays in releasing documents. If the bank is responsible for the delay, it will compensate the borrower at a rate of Rs 5,000 for each day of delay.
* In cases of loss or damage to original documents, either partially or entirely, banks should assist the borrower in obtaining duplicate or certified copies of the documents and bear the associated costs. An additional 30-day period is allowed for completing this process, and the delayed period penalty will be calculated thereafter (total of 60 days).
*The compensation provided under these guidelines does not affect the borrower’s rights to seek additional compensation as per applicable laws.
These measures aim to standardize and streamline the process of releasing property documents, ensuring fairness and transparency in dealings between banks and borrowers.
These directives apply to cases where the release of original movable or immovable property documents is scheduled on or after December 1, 2023. To promote responsible lending conduct among banks and address these issues, the RBI has outlined several measures:
*Banks must release all original movable or immovable property documents and remove registered charges within 30 days after full loan repayment or settlement.
*Borrowers can choose to collect the original documents from the bank’s outlet or branch where the loan account was serviced or from any other bank office where the documents are available, based on their preference.
*The loan sanction letters issued after the effective date will specify the timeline and location for returning the original documents.
* Banks should have a defined procedure for returning original documents to the legal heirs in case of the sole borrower’s or joint borrowers’ demise. This procedure must be made available on the bank’s website for customer information.
*Compensation will be provided for delays in releasing documents. If the bank is responsible for the delay, it will compensate the borrower at a rate of Rs 5,000 for each day of delay.
* In cases of loss or damage to original documents, either partially or entirely, banks should assist the borrower in obtaining duplicate or certified copies of the documents and bear the associated costs. An additional 30-day period is allowed for completing this process, and the delayed period penalty will be calculated thereafter (total of 60 days).
*The compensation provided under these guidelines does not affect the borrower’s rights to seek additional compensation as per applicable laws.
These measures aim to standardize and streamline the process of releasing property documents, ensuring fairness and transparency in dealings between banks and borrowers.
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