RBI – RBI has given instructions through a notification that the documents of movable or immovable property should be returned to the loan giving institutions within 30 days of repayment of the bank loan. If banks fail to do so, then they will have to pay a fine of Rs 5000 to the customer for every 1 day of delay.
In today’s era, it is common to construct a house or buy a flat by taking a home loan. Be it a bank or a non-financial bank, one has to submit papers of one’s property as collateral in lieu of loan. Many times people mortgage movable or immovable property. It has also been observed that after repaying the loan, banks or non-financial banks continuously delay in returning the documents of your property which you had submitted to the bank.
After continuously receiving such complaints, the bank regulator Reserve Bank has given instructions through a notification that the documents of movable or immovable property should be returned to the loan giving institutions within 30 days of repayment of the bank loan. If banks fail to do so, then they will have to pay a fine of Rs 5000 to the customer for every 1 day of delay. This notification has been issued on the RBI website.
The Central Bank has said that the time limit and place for returning the documents after repaying the loan given against mortgage of property documents should be mentioned in the loan sanction letter itself. Implementation of this instruction of the Reserve Bank of India will start from December 1, 2023. The Reserve Bank of India has given this instruction to protect the rights of loan takers and to improve the loan granting process. The Reserve Bank says that this guideline has been issued under the Fair Practice Code. The customer taking the loan has been given the facility to either go to the nearest branch and collect his documents or as per the bank, collect these documents from any center near him.
What are the instructions of RBI?
The regulated entities i.e. Bank or NBFC will release all original movable/immovable property documents and remove the charges registered in any registry within a period of 30 days after full repayment/settlement of the loan account.
The borrower will be given the option to collect the original movable/immovable property documents as per his preference either from the banking outlet/branch where the loan account was operated or from any other office of the regulated entities where the documents are available.
The time limit and place for return of original movable/immovable property documents will be mentioned in the loan section letter to be issued.
Regulated entities shall have a well laid down procedure for return of original movable/immovable property documents to the legal heirs in case of accidental death of the sole borrower or joint borrower. Such process will also be displayed on the website of the regulated entities along with other similar policies and procedures for customer information.
Compensation will have to be paid for delay-
If the bank delays return of the original documents by the borrower till 30 days after full repayment of the loan or fails to file the charge satisfaction form with the concerned registry for more than 30 days after full repayment or settlement of the loan So they will have to tell the customers about the reasons for such delay. In cases where the delay is caused by the bank or NBFC, they will have to compensate the borrowers at the rate of Rs 5,000 per day.
In case of loss or damage of original movable or immovable property documents, partially or completely, the Bank or NBFC will assist the borrower in obtaining duplicate or certified copies of the documents along with bearing expenses. However, in such cases, an additional period of 30 days will be available to the regulated entities to complete the process and the compensation for the delayed period will be calculated thereafter (i.e., after the total period of 60 days). The compensation to be paid under these instructions shall not affect the rights of the baror to receive any other compensation in accordance with any applicable law.
From which date will it come into effect-
These instructions will be applicable to all cases where the original movable or immovable property documents are to be released on or after December 1, 2023. These instructions have been issued under Sections 21, 35A and 56 of the Banking Regulation Act, 1949, Sections 45JA and 45L of the Reserve Bank of India Act, 1934 and Section 30A of the National Housing Bank Act, 1987.
