The Reserve Bank of India (RBI) on Wednesday said Regulated Entities (RE) should release the original movable/immovable property documents and remove charges registered with the registry within 30 days after full repayment and settlement of the loan account.
For delays, attributable to the REs, beyond 30 days, they will compensate borrowers at a rate of 5,000 per day for each day of delay. REs will have to communicate to the borrower the reasons for such delay. These directions will be applicable to all cases where the release of original movable/immovable property documents falls due on or after December 1, 2023. These directions were being issued to address the issues faced by the borrowers and promote responsible lending conduct among the REs, the RBI said.
In terms of the Fair Practices Code, since 2003, REs have to release all movable/immovable property documents. It has been observed that REs follow divergent practices in the release of such movable/immovable property documents leading to customer grievances and disputes, the RBI said.
The borrower should get 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.
The timeline and place of return of original movable and immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date, it added.
In order to address the contingent event of the demise of the sole borrower or joint borrowers, the REs shall have a well-laid-out procedure for the return of original movable/immovable property documents to the legal heirs.
First Published: Sep 13 2023 | 10:17 AM IST