The Reserve Bank of India (RBI) has ordered the Regulated Entities (REs) to release all documents within 30 days of loan repayment. The direction shall be applicable to all cases where release of original movable/immovable property documents falls due on or after 1st December, 2023.
In a circular issued today, RBI said, “In terms of the guidelines on Fair Practices Code issued to various Regulated Entities (REs) since 2003, REs are required to release all movable/immovable property documents upon receiving full repayment and closure of loan account. The REs shall release all the original movable/immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/settlement of the loan account.”
Further, according to the circular, a borrower shall be given the option of collecting the original movable immovable property documents either from the banking outlet/branch where the loan account was serviced or any other office of the RE where the documents are available, as per her/his preference.
In addition, it said that the timeline and place of return of original movable/immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date.
Besides, in order to address the contingent event of demise of the sole borrower or joint borrowers, the REs shall have a well laid out procedure for return of original movable/immovable property documents to the legal heirs. Such procedure shall be displayed on the website of the REs along with other similar policies and procedures for customer information, mentioned the circular.
It also stated that in case of delay in releasing of original movable/immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/settlement of loan, the RE shall communicate to the borrower reasons for such delay. In case where the delay is attributable to the RE, it shall compensate the borrower at the rate of ₹5,000/- for each day of the delays.
In case of loss/damage to original movable immovable property documents, either in part or in full, the REs shall assist the borrower in obtaining duplicate/certified copies of the movable/immovable property documents and shall bear the associated costs, in addition to paying compensation. However, in such cases, an additional time of 30 days will be available to the REs to complete this procedure and the delayed period penalty will be calculated thereafter i.e., after a total period of 60 days, concluded the circular.