The Reserve Bank of India (RBI) issued a notification on Wednesday, directing banks and financial institutions to release all original movable or immovable property documents and remove charges registered with any registry within 30 days after full repayment of a loan by the borrower.
The notification further stated that if one fails to comply with the direction, Regulated Entities (REs) would compensate the borrower at the rate of ₹ 5,000 for each day of delay.
Responsible Lending Conduct – Release of Movable / Immovable Property Documents on Repayment/ Settlement of Personal Loanshttps://t.co/zyUFHP36Gl
— ReserveBankOfIndia (@RBI) September 13, 2023
The REs are required to release all movable/immovable property documents upon receiving full repayment and closure of the loan account. However, the RBI noticed that REs follow divergent practices in the release of such movable or immovable property documents leading to customer grievances and disputes.
The RBI said, “ REs 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.” It also said that the RE would communicate with the borrower in case a delay takes place.
Moreover, the borrower will also have the choice to collect the original movable/ immovable property documents from either 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, as per RBI’s notification.
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, it said.
In order to address the contingent in the event of the demise of the sole borrower or joint borrowers, RBI said, REs shall have a well-laid-out procedure for the return of original movable/immovable property documents to the legal heirs.
According to RBI, such procedures will also be displayed on the website of REs along with other similar policies and procedures for customer information.
In case the borrowers lose or damage their original movable/immovable property documents, the notification said, REs would assist the borrower in obtaining duplicate/certified copies of such documents and would bear the associated costs, in addition to paying compensation.
“However, in such cases, an additional time of 30 days will be available to REs to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days),” it said.
The compensation paid under these instructions would be without prejudice to a borrower’s claim to any compensation under any applicable legislation, it stated.
These directions would apply to all cases where the release of original movable/ immovable property documents falls due on or after December 1, 2023, RBI said.
(With Agency inputs)
Copyright © 2025 Top Indian News
