RBI Sets 30-Day Limit To Release Property Documents After Loan Closure

The Reserve Bank of India (RBI) on Wednesday issued guidelines for banks, non-banking financial institutions (NBFCs) and other regular related entities  to tackle borrower issues and encourage responsible lending behavior among these entities.

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The central bank further said that the Regulated Entities (RE) shall release all the original movable and immovable properties documents and remove any charges registered with any registry within 30 days after the complete repayment or settlement of the loan account.

The borrower shall be given the choice of collecting the original movable and immovable property documents either from the banking outlet or branch where the loan account was serviced or any other office of the RE where the documents are available, as per his preference.

The RBI notification also clarified that the REs shall have a well laid out procedure for return of original movable / immovable property documents to the legal heirs, in order to address the contingent event of demise of the sole borrower or joint borrowers.

Such procedures shall be displayed on the website of the REs along with other similar policies and procedures for customer information, it added.

If there is a delay in the release of the original property documents or in the filing of the charge satisfaction form with the relevant registry, the Real Estate (RE) entity must promptly communicate the reasons for this delay to the borrower if it extends beyond 30 days after the loan settlement.

However, if the delay is attributable to the RE, it shall compensate the borrower at the rate of ₹5,000 for each day of delay, the RBI said. An additional time of 30 days will be given to the REs to complete this procedure and the delayed period penalty will be calculated thereafter.

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These directions shall be applicable to all cases where release of original property documents falls due on or after December 1, 2023.