“RBI Directs Banks to Return Property Papers Within 30 Days of Loan Repayment, Imposes Daily ₹5000 Fine for Delays”
The RBI mandates banks to return property documents within 30 days of loan repayment or face daily fines of ₹5000, aiming to address grievances and disputes while enhancing borrower experience.
The Reserve Bank of India (RBI) has issued a significant directive to banks, instructing them to return all movable and immovable property documents within 30 days of full loan repayment and loan account closure. In the event of a delay caused by the bank, the RBI has mandated a compensation of ₹5000 for each day of delay, as stated in a notification released on Wednesday.
Addressing Grievances and Disputes
The RBI’s decision comes in response to observed discrepancies in the practices followed by regulated entities (REs) when releasing property documents. These inconsistencies had led to customer grievances and disputes, prompting the central bank to intervene.
Compensation for Delays
To rectify the situation and ensure borrowers’ rights, the RBI has outlined specific measures. Borrowers must be given the option to collect their original documents from the branch where the loan account was serviced or any other office of the RE where the documents were maintained. In cases of loss or damage, whether partial or full, REs are obligated to facilitate the issuance of duplicate copies of the original documents. Furthermore, REs will bear the associated costs, in addition to the daily ₹5000 fine in case of delays.
However, the RBI has provided a 60-day window for REs to complete the process of facilitating duplicate copies. The imposition of the daily fine will commence after this 60-day period.
Effective Date and Applicability
These guidelines are applicable to all property documents due for release on or after December 1. The directive applies to various financial institutions, including:
- Commercial Banks (including Small Finance Banks and Regional Rural Banks, excluding Payments Banks)
- Local Area Banks
- Primary (Urban) Co-operative Banks
- State Co-operative Banks
- District Central Co-operative Banks
- Non-Banking Financial Companies (excluding Housing Finance Companies)
- Asset Reconstruction Companies.
The RBI’s proactive measures aim to streamline the release of property documents, enhance borrower experience, and minimize disputes within the lending landscape.
Banks are directed by the RBI to promptly return property documents upon loan repayment, with daily fines imposed for delays, effective from December 1, to ensure borrower satisfaction and consistency in lending practices.
Sources By Agencies
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