RBI’s New Guidelines Offer Relief to Borrowers: Property Documents Must Be Returned Within 30 Days of Loan Repayment
The Reserve Bank of India (RBI) has taken a significant step to protect borrowers and promote responsible lending by issuing new guidelines for banks, non-banking financial companies (NBFCs), and other regulated entities (REs).
According to the directive, these institutions are now required to release all original movable or immovable property documents and remove any charges within 30 days after the full repayment or settlement of a loan account.
These comprehensive guidelines cover various scenarios to safeguard the interests of borrowers. In cases of delays in releasing the original property documents or failure to satisfy the charge forms beyond the stipulated 30-day period, the REs must communicate the reasons for the delay to the borrower. If the delay is attributed to the RE, a penalty of ₹5,000 per day will be enforced.
Furthermore, in the unfortunate event of the demise of the sole borrower or joint borrowers, REs are now mandated to have a well-defined procedure for the return of original property documents to the legal heirs. This policy, along with other customer-centric policies, must be prominently displayed on the REs’ websites for public awareness.
In situations involving the loss or damage of original property documents, the REs will provide assistance to the borrower in obtaining duplicate or certified copies, covering the associated costs. An additional 30-day timeframe will be granted to complete this procedure before penalties are assessed.
This move by the RBI has been widely praised, with industry experts seeing it as a significant development. It is expected to benefit borrowers engaged in collateral-based lending, including loans for vehicles, securities, and more. These regulations will apply to loans where full repayment occurs on or after December 1, 2023.
