New Delhi, (UNI) The reserve Bank of India (RBI) on Wednesday directed banks and non-banking finance companies (NBFCs) to release all the original movable/immovable property documents and remove charges registered with any registry within 30 days after full repayment and settlement of the loan account.
In case of delay in releasing of the documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan, the banks and NBFCs shall communicate to the borrower reasons for such delay.
“In case where the delay is attributable to the REs (registered entities), it shall compensate the borrower at the rate of Rs 5,000 for each day of delay,” the RBI said.
Regulated entities include commercial banks, regional rural banks or RRBs, primary (urban) co-operative banks, NBFCs, housing finance companies (HFCs) and asset reconstruction companies.
The new directions will be applicable from December 1, 2023.
The RBI said that in case of loss/damage to original documents, the regulated entities will assist the borrower in obtaining duplicate/certified copies of the papers and also bear the associated costs, in addition to paying compensation.
“However, in such cases, an additional time of 30 days will be available to the REs to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days),” the RBI said.
Guidelines under Fair Practices Code issued to various REs require them to release all movable/immovable property documents upon receiving full repayment and closure of loan account.
The RBI said that it has, however, observed that the REs follow divergent practices in release of property documents leading to customer grievances and disputes.
It further said that the new directive has been issued to address the issues faced by the borrowers and towards promoting responsible lending conduct among the REs.
