On Wednesday, the Reserve Bank urged directed banks and financial institutions to release all original movable or immovable property documents and eliminate charges listed with any registration within 30 days of the borrower’s complete repayment of a loan.
In the event that Regulated Entities (REs) fail to comply with the directive, the RBI stated in a statement that the borrower would be compensated at the rate of Rs 5,000 for each day of delay.
RBI stated that REs use disparate practices in releasing such movable or immovable property documentation which leads to consumer complaints and disputes.
To ensure consistency, the RBI requested that “REs 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”.
In case of delay, it stated that the RE would notify the reasons for the delay to the borrower.
“The borrower shall 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 other office of the RE where the documents are available, as per her/his preference”, the statement reads.
RBI went on to say, “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”.
To address the possibility of the sole borrower or joint borrower’s death, the RBI stated that REs must have a well-laid-out protocol for returning original movable/immovable property documents to the legal heirs.
This policy, along with other similar rules and procedures for consumer information, would be disclosed on REs’ website, it noted.
In case of loss or damage to original movable/immovable property documents, the notification said that REs would help the borrower in acquiring duplicate/certified copies of such documents and would shoulder the associated costs in addition to compensating the borrower.
“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)”, the RBI continued.
The RBI further stated, “The compensation provided under these directions would be without prejudice to the rights of a borrower to get any other compensation as per any applicable law”.
“These directions would be applicable to all cases where the release of original movable/ immovable property documents falls due on or after December 1, 2023”, the RBI added.
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