The Reserve Bank of India (RBI) has taken a significant step towards ensuring fair practices and safeguarding the rights of borrowers in the financial sector. In a recent notification, the RBI introduced comprehensive guidelines pertaining to the release of movable and immovable property documents by Regulated Entities (REs). These guidelines, aimed at preventing customer grievances and disputes, come into effect on December 1, 2023.
Release of Movable / Immovable Property Documents
Under the new guidelines, REs are required to release all original movable and immovable property documents and remove any charges registered with registries within 30 days after full repayment or settlement of a loan account. Borrowers will have the flexibility to collect these documents from the banking outlet or branch where the loan was serviced or from another office of the RE, according to their preference. The specifics of when and where these documents should be returned will be clearly stated in the loan sanction letters issued on or after the effective date.
Addressing Contingencies
In situations where the borrower(s) faces an unfortunate event like demise, the REs are mandated to have a well-defined procedure for the return of original documents to legal heirs. This procedure will be made available on the REs’ websites, ensuring transparency and accessibility for customers.
Compensation for Delays
To ensure timely compliance with document release, the RBI guidelines have introduced a compensation mechanism. In case of any delay exceeding 30 days in releasing the documents or failure to file a charge satisfaction form with the relevant registry after full repayment or settlement of a loan, the REs are required to communicate the reasons for the delay to the borrower. If the delay is attributable to the RE, they must compensate the borrower at a rate of ₹5,000 per day of delay.
Moreover, if there is any loss or damage to the original movable or immovable property documents, either partially or in full, the REs must assist the borrower in obtaining duplicate or certified copies of the documents. The REs are also responsible for bearing the associated costs, in addition to paying compensation as indicated earlier. However, in such cases, the REs have an extended period of 30 days to complete this procedure before the penalty for the delay is calculated (a total of 60 days).
Applicability
These guidelines, issued under various sections of banking and regulatory acts, will be applicable to all cases where the release of original movable or immovable property documents is due on or after December 1, 2023. It’s important for both borrowers and REs to be aware of these new directives to ensure compliance and protect the rights and interests of all parties involved. These measures reflect the RBI’s commitment to promoting fairness, transparency, and customer-centric practices in the financial sector.