Introduction: RBI issued a direction RBI/2023-24/60 DoR.MCS.REC.38/01.01.001/2023-24 dated 13.09.2023 to all the regulated entities for the release of all movable / immovable property documents upon receiving full repayment and closure of loan account.
Need for the Direction: RBI noted that The Fair Practices Code guidelines issued to Regulated Entities (REs) since 2003 mandate the release of property documents (both movable and immovable) upon full loan repayment and account closure. However, inconsistent practices by REs in releasing these documents have resulted in customer complaints and disputes.
Applicability of the Direction: Directions shall be applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023.
Procedure for Release of (both movable and immovable) Property:
1.Timeline: The direction states that REs must release all original property documents and clear any registered charges within 30 days after full loan repayment or settlement.
2.Collection of Documents: Borrowers can choose to collect their original property documents from either the loan-servicing branch or another RE office where the documents are available.
3.Sanction letter to mention the time and place of return of documents: 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.
4.Procedure in case of demise of Borrower: In order to address the 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.
Compensation for Delay in release of orginal documents:
1.Delay on the Part of RE: In case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan, the RE shall communicate to the borrower reasons for such delay. In case where the delay is attributable to the RE, it shall compensate the borrower at the rate of ₹5,000/- for each day of delay.
2.Loss/damage to original movable / immovable property documents: If the borrower’s original property documents are lost or damaged, the REs must help the borrower obtain duplicate or certified copies. The REs will cover the costs and provide compensation as mentioned in paragraph 6. However, they have an additional 30 days to complete this process, and any penalties for delay will be calculated after a total period of 60 days.
Copy of Direction:
