RBI Orders Release Of Documents Related To Properties And Collateral Within 30 Days
Date
9/18/2023 7:46:17 AM
(MENAFN- KNN India)
RBI Orders Release Of Documents Related To Properties And Collateral Within 30 Days Mumbai, Sept 14 (KNN) The Reserve bank of India (RBI) on Wednesday notified that Banks and NBFCs have to release documents of properties and collateral mandatorily within 30 days.
The central bank issued this notification focusing on the Responsible Lending Conduct – Release of Movable / Immovable Property Documents on Repayment and Settlement of Personal
Loans.
In terms of the guidelines on Fair Practices Code issued to various Regulated Entities (REs) since 2003, REs are required to release all movable / immovable property documents upon receiving full repayment and closure of loan account.
However, RBI has observed that the REs follow divergent practices in release of such movable / immovable property documents leading to customer grievances and disputes.
To address the issues faced by the borrowers and towards promoting responsible lending conduct among the REs, RBI has issued a slew of directions that shall be applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023.
The REs shall release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan account.
Further the borrower shall be given the option of collecting the original movable / immovable property documents either from the banking outlet / branch where the loan account was serviced or any other office of the RE where the documents are available, as per her / his preference.
The timeline and place of return of original movable / immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date, as per the notification.
In order to address the contingent event of demise of the sole borrower or joint borrowers, the REs shall have a well laid out procedure for return of original movable / immovable property documents to the legal heirs. Such procedure shall be displayed on the website of the REs along with other similar policies and procedures for customer information.
In case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan, the RE shall communicate to the borrower reasons for such delay.
Moreover in case where the delay is attributable to the RE, it shall compensate the borrower at the rate of Rs 5,000/- for each day of delay.
The notification can be accessed at:
(KNN Bureau)
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