Once the borrower has made the full payment towards a loan, lenders shall release all the original movable/immovable property documents and remove charges registered with any registry within a period of 30 days, Reserve Bank of India said on Wednesday.
In a breather to the borrowers, RBI said for delays attributable to the REs, beyond 30 days, they will compensate borrowers at a rate of Rs 5,000 per day for each day of delay.
Lenders will have to communicate to the borrower the reasons for such delay.
What if the documents are lost or damaged?
Central bank in its circular has said 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.
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).
These directions will be applicable to all cases where the release of original movable/immovable property documents falls due on or after December 1, 2023. These directions were being issued to address the issues faced by the borrowers and promote responsible lending conduct among the REs, the RBI said.
How borrowers can collect the documents, and when?
RBI now provides the borrower an 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 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.
In case of contingent event of demise of the sole borrower or joint borrowers, the REs shall have a well laid out procedure for return of original movable / 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 highlighted.
