RBI asks banks, NBFCs to release original movable, unmovable properly documents within 30 days of full repayment of loan
The Hindu
RBI issues directions to REs to release all property docs & remove charges after loan repayment. Borrowers can collect docs from banking outlet or other RE office. REs must have procedure for return of docs to legal heirs & must compensate borrowers for delay/damage. Directions applicable from Dec 1, 2023.
The Reserve Bank of India (RBI) has issued directions to Regulated Entities (REs) such as banks and non-banking finance companies (NBFCs) 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.
This instruction has come as per the guidelines on Fair Practices Code issued to various REs since 2003, who are required to release all movable / immovable property documents upon receiving full repayment and closure of loan account.
“However, it has been observed that the REs follow divergent practices in release of such movable / immovable property documents leading to customer grievances and disputes,” the RBI said in the circular issued on Wednesday.
To address the issues faced by the borrowers and towards promoting responsible lending conduct among the REs, the directions have been issued, the circular said.
As per the directive the borrower will 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 from 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,” the circular said.
To address the contingent event of demise of the sole borrower or joint borrowers, the REs must have a well laid out procedure for return of original movable / immovable property documents to the legal heirs.
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