MUMBAI: The Reserve Bank of India on Wednesday asked banks and other regulated entities to release all the original movable or immovable property documents and remove charges registered against any personal loan borrowers within a period of 30 days after full repayment or settlement of loans.
This comes after the central bank observed that the regulated entities follow “divergent practices”, leading to customer grievances and disputes.
To address the issues faced by the borrowers and promote responsible lending conduct, RBI today issued a series of directions.
Among those, it said the borrower shall be given the option of collecting the original movable or immovable property documents either from the banking outlet or branch where the loan account was serviced or any other office of the entity where the documents are available, as per the borrower’s preference.
In the case of the demise of the sole borrower or joint borrowers, the entities shall have a well-laid-out procedure for the return of original movable or immovable property documents to the legal heirs.
“Such procedure shall be displayed on the website of the REs along with other similar policies and procedures for customer information,” RBI said.
The RBI also as part of its directions proposed providing compensation for delay in release of such documents.
In cases where the delay is attributable to the regulated entity, RBI said it shall compensate the borrower with Rs 5,000 for each day of delay. “In case of loss/damage to original movable/immovable property documents, either in part or in full, the REs shall assist the borrower in obtaining duplicate/certified copies of the movable/immovable property documents and shall bear the associated costs, in addition to paying compensation…” RBI said.
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 -- after a total period of 60 days.