RBI: The Reserve Bank issued a directive to banks and financial institutions on Wednesday requiring them to surrender all original documents pertaining to moveable or immovable property and eliminate charges listed with any registry after 30 days of the borrower’s complete repayment of the loan. Regulated Entities (REs) would pay the borrower Rs 5,000 for each day of lateness if they disobeyed the order, the RBI stated in a notification.
RBI outlines procedures for borrowers to obtain property documents and for banks to transfer them to legal heirs
The original moveable and immovable property documents may be obtained by the borrower, in accordance with her or his preference, either from the banking outlet/branch where the loan account was serviced or from any other RE office where the documents are available. The loan sanction letters issued on or after the effective date would include information about the schedule and location for returning the original moveable and immovable property documents, it said. According to the RBI, REs must have a clear system in place for returning the original movable and immovable property documents to the legal heirs in the event that the sole borrower or joint borrowers pass away. Such a method, along with other similar policies and procedures for consumer information, would be available on REs’ websites, it was stated.
RBI assures borrowers of compensation and assistance in case of loss or damage of property documents
The notification stated that REs would assist the borrower in getting duplicate/certified copies of such documents and would bear the related costs, in addition to giving compensation, in the event of loss or damage to original movable/immovable property documents. “However, in such cases, an additional time of 30 days will be available to REs to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days),” it said. It stated that any rights a borrower may have to receive more compensation under any applicable legislation would not be affected by the compensation offered under these instructions. According to RBI, these guidelines will apply to all situations where the release of original moveable or immovable property documents is expected on or after December 1, 2023.
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