RBI mandates release of property documents within 30 days post-loan repayment

The Reserve Bank of India (RBI) has issued a directive to all financial institutions, including banks, non-banking financial companies, housing finance firms, asset reconstruction entities, and others, emphasizing the timely release of property documents. As per the new mandate, these institutions are required to return all original movable and immovable property documents to borrowers within a 30-day window following the complete repayment of the loan.

This move comes in response to observed inconsistencies in the practices of regulated entities (REs) concerning the release of such documents. The RBI noted that these divergent practices have been a significant source of customer grievances and disputes. To standardize the process and reduce potential conflicts, the central bank has now set a clear timeline for the release of these documents.

Borrowers will be provided with the flexibility to choose the collection point for their documents. They can opt to collect their property papers either from the branch where their loan was processed or any other office of the RE where the documents might be stored. This choice will be clearly indicated in the loan sanction letters issued to borrowers post the effective date of this directive.

Furthermore, in the unfortunate event of the death of a borrower, whether sole or joint, the RBI has instructed REs to establish a transparent procedure for handing over the original property documents to the legal heirs. This procedure, along with other customer-centric policies, will be prominently displayed on the REs' official websites.

In situations where there's a delay beyond the stipulated 30 days in returning the documents or if there's a failure in filing the charge satisfaction form with the relevant registry, REs are obligated to provide a valid reason to the borrower. If the delay is due to the RE's oversight, a compensation of Rs 5,000 per day of delay will be levied.

Additionally, if there's any loss or damage to the original documents, the REs are responsible for assisting borrowers in procuring duplicate or certified copies, bearing all related costs. In such scenarios, REs are granted an additional 30 days, post which the penalty for delay will be applicable.

This directive will be effective for all cases where the release of property documents is due on or after December 1, 2023.

In conclusion, the RBI's latest directive aims to streamline the process of returning property documents post-loan repayment, ensuring transparency and reducing customer grievances. With clear guidelines and penalties in place, borrowers can expect a more consistent and timely return of their valuable documents.

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RBI mandates release of property documents within 30 days post-loan repayment

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