The Reserve Bank of India (RBI) is introducing a significant change to benefit home loan borrowers.
Under this directive, RBI is instructing banks and NBFCs to return property documents within 30 days of loan repayment.
Failure to comply will result in a daily fine of Rs 5,000. RBI also mandates the removal of any charges registered with a property’s registry.
This rule applies to various loan types, including personal, home, car, or gold loans, where borrowers have pledged their assets, movable or immovable.
Effective Date: December 1, 2023
As per the RBI notification, this new rule takes effect from December 1, 2023.
The directive outlines penalties of Rs 5,000 per day for delays in document issuance by banks or REs (Regulated Entities), with property owners responsible for paying fines.
RBI also stipulates that if a lender misplaces a customer’s property papers, the bank must assist in obtaining duplicate copies.
It’s important to note that returning property documents to the bank after loan repayment is mandatory.
RBI has issued these instructions to all banks and Regulated Entities (REs) on September 13.
The Reserve Bank has taken this step due to increasing complaints from customers about delays in receiving their property documents even after loan repayment.
Consequently, RBI emphasizes that banks and financial institutions must return all documents within 30 days after full loan repayment, and any registered charges must also be removed.
