The Reserve Bank of India (RBI) on Wednesday said banks must release property documents and clear charges against borrowers with any registry within 30 days after the borrower fully settles their loan account. The norm shall be applicable to all cases where release of property documents falls due from December 1 onwards.
In case of non-compliance and delay in releasing property documents or failing to file charge satisfaction form with relevant registry beyond 30 days of full repayment, the lender shall communicate to the borrower reasons for such delay. In case the delay is attributable to the bank or non-bank lender, it shall compensate the borrower at the rate of `5,000 for each day of delay.
The regulator said despite its 2003 guidelines on Fair Practices Code which pertain to lenders releasing property document after loan settlement, it has been observed that lenders are following divergent practices in releasing property documents, thereby leading to customer grievances and disputes.
Lenders shall also be given the option of collecting the original property documents either from the banking outlet or branch where the loan account was serviced or any other office of the lender where the documents are available. The timeline and place of return of original property documents should also be mentioned in the loan sanction letters issued on or after the effective date.
Further, in order to address the event of a demise of the sole borrower or joint borrowers, the lenders shall have a well laid out procedure for return of property documents to the legal heirs. Such procedure shall be displayed on the website of the banks along with other similar policies and procedures for customer information.
“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,” the RBI said. However, in such cases, an additional time of 30 days will be extended to the lenders to complete this procedure and the delayed period penalty will be calculated thereafter, after a total period of 60 days.
