REAL ESTATE UPDATE
25th September 2023
Issue No.13/23-24
RELEASE OF PROPERTY DOCUMENTS BY BANKS ON REPAYMENT OF LOAN
The Reserve Bank of India has issued a notification dated 13th September 2023 bearing no. RBI/2023-24/60 DoR.MCS.REC.38/01.01.001/2023-24 (‘Notification’), in the form of directions to all the commercial banks, urban co-operative banks, non-banking financial companies, asset reconstruction companies and State and District central co-operative banks (‘Regulated Entities’) to release all the original property documents i.e. both movable or immovable property (‘Original Documents’) deposited with any registry within a period of 30 days after full repayment or settlement of the loan account by the borrower. This Notification is applicable to release of all Original Documents falling due on or after 1st December, 2023.
As per the Notification a penalty is imposed if the Original Documents are not released to the borrower within 30 days of loan repayment. In such cases the Regulated Entities shall be responsible to communicate to the borrower reasons for such delay and if the delay is attributable to the Regulated Entities, it shall be liable to compensate the borrower at the rate of Rs. 5,000/- for each day of delay. In addition to paying the compensation of Rs. 5,000/- per day, the Regulated Entities are also directed to assist the borrower and bear the associated costs for obtaining duplicate or certified copies of property documents in event of loss or damage of the Original Documents.
The Notification has provided the borrower with an option of collecting the Original Documents either from the banking outlet or the branch where the loan account was serviced or any other office of the Regulated Entities where the documents are available. In case, if the borrower or the joint borrower passes away, the Regulated Entities must have a clear procedure for returning the Original Documents to the legal heirs. It has been further clarified that the sanction letters issued by the Regulated Entities will include the timeline and the place for return of such Original Documents.
This Notification has been issued in response to the observations made by the Reserve Bank of India with respect to the erratic practices followed by the Regulated Entities of releasing the deposited Original Documents and in order to solve the hardship faced by the borrowers.
The Notification can be accessed here.
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