RBI Issues Guidelines for Responsible Lending; Sets Timeline to Release Property Documents After Loan Closure
The directions will be applicable to cases where release of original documents falls due on or after 1 December
By : Legal Era
Update: 2023-09-13 05:15 GMT
RBI Issues Guidelines for Responsible Lending; Sets Timeline to Release Property Documents After Loan Closure
The directions will be applicable to cases where release of original documents falls due on or after 1 December
The Reserve Bank of India (RBI) has issued guidelines for banks, non-banking financial companies (NBFCs), and other regulated entities to address the issues faced by borrowers and towards promoting responsible lending conduct.
It stated that the Regulated Entities (RE) would release all the original movable or immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment or settlement of the loan account.
Additionally, the borrower would have the option of collecting the documents either from the banking outlet or the branch from where the loan account was serviced, or any other office of the RE where the documents are available.
The RBI notification further stated that to address the contingent event of the demise of the sole borrower or joint borrowers, the REs will have a well-laid-out procedure for the return of original movable/immovable property documents to the legal heirs. These procedures would be displayed on the website of the REs along with related policies for customer information.
In case of delay in releasing of original property documents or failure to file charge satisfaction form with the relevant registry beyond 30 days after loan settlement, the RE shall communicate to the borrower the reasons for the delay. Importantly, if the delay was attributed to the RE, it would compensate the borrower at the rate of Rs.5,000 per day.
The regulatory body further stated that in case of loss or damage to original property documents, the REs shall assist the borrower in obtaining duplicate or certified copies of the documents and 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.