Setting New Standards for Accountability
The Reserve Bank of India (RBI) has issued a groundbreaking directive aimed at safeguarding the interests of borrowers. As per the instructions, all banks and financial institutions must return original property documents related to movable or immovable assets to the concerned borrowers within 30 days after full loan repayment. A failure to adhere to this stipulation will result in a daily penalty of ₹5000 imposed on the erring institution.
Details of the Directive
The mandate is applicable to all cases where original documents pertaining to movable or immovable assets are to be issued after December 1, 2023. Furthermore, banks must remove any additional charges that were levied. Borrowers will have the option to collect the documents from the same bank branch where their loan account was operated, or any other relevant office of the concerned financial institution. These details will be mentioned in loan approval letters to maintain clarity and transparency.
Penalties for Delays and Loss
In case of a delay in returning the original documents, banks and financial institutions are obliged to inform the borrowers, and a daily penalty of ₹5000 will be imposed after the 30-day deadline. Should the documents get lost or damaged, the financial institution will assist the borrower in obtaining duplicate/certified copies and bear the associated costs.
Customer Complaints Prompt Action
The RBI’s decision comes in the wake of numerous complaints that have been received about banks and NBFCs delaying the return of property documents even after loan repayments. The procrastination has led to legal disputes, further complicating matters for the borrowers.
Who Needs to Comply?
All public and private commercial banks, small finance banks, regional rural banks, cooperative banks, NBFCs, housing finance companies, asset reconstruction companies, and other financial institutions must adhere to these guidelines.
| Criteria | Description |
|---|---|
| Compliance Deadline | 30 days after full loan repayment |
| Daily Penalty for Non-compliance | ₹5000 |
| Applicable To | All banks and financial institutions |
| Start Date for New Cases | December 1, 2023 |
| What to do if Documents are Lost | Institution to assist in obtaining duplicates and bear the cost |
| Additional Time for Lost Documents | 30 extra days before penalties apply |
