Mumbai, September 13: The Reserve Bank of India (RBI) has issued a directive requiring banks and other regulated entities to release all original property documents, whether movable or immovable, and remove charges registered against personal loan borrowers within 30 days of full loan repayment or settlement.
The RBI’s decision stems from its observation of “divergent practices” among regulated entities, which have led to customer grievances and disputes. To address these issues and promote responsible lending conduct, the RBI has issued a series of guidelines.
According to the new directives, borrowers will have the option to collect their original property documents from either the banking outlet or branch where the loan account was serviced or any other office of the entity where the documents are available, based on their preference.
In the unfortunate event of the sole borrower or joint borrowers’ demise, the entities must have a well-defined procedure for returning the original property documents to the legal heirs. The RBI mandates that such procedures be prominently displayed on the regulated entities’ websites, along with other relevant policies and procedures for customer information.
Furthermore, the RBI has proposed compensation for delays in releasing these documents. In cases where the delay is attributable to the regulated entity, the RBI requires compensation to be paid to the borrower at a rate of Rs 5,000 for each day of delay.
In situations where the original property documents are lost or damaged, either partially or entirely, the regulated entities are obligated to assist the borrower in obtaining duplicate or certified copies of the documents and bear the associated costs. However, in such cases, an additional 30-day window is granted to the regulated entities to complete this procedure, with penalty calculations for delayed periods being applicable afterward, totaling 60 days.
