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The Reserve Bank of India (RBI) has asked all banks, non-banking finance companies (NBFCs) and asset reconstruction companies (ARCs) to 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.
These directions are part of the central bank’s responsible lending conduct for regulated entities (REs).
The 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.
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.
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In order to address the contingent event of the demise of the sole borrower or joint borrowers, the REs will l 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.
Compensation
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 delay.
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. This is in addition to 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).
RBI said 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.
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