Streamlining Property Documentation Process for Loan Repayments: RBI’s New Directive TAXCONCEPT

The Reserve Bank of India (RBI) issued a directive mandating Regulated Entities (REs) including banks to surrender all original movable, immovable property papers and eliminate charges lodged with any registry within 30 days of the loan account being fully repaid/ else pay the fine on a delayed number of days.

The RBI made this announcement via a notification issued on September 13, 2023. Personal loans include any loans that involve collateral, like home loan, car loan or gold loan.

This action was taken in response to observations that the REs’ inconsistent practices in disclosing these documents on moveable and immovable property were causing customer complaints and conflicts, said RBI.

The following Directions are being published in order to solve the problems faced by the borrowers and to encourage REs to conduct themselves responsibly while making loans:

Time period
After the loan account has been fully repaid or settled, the banks or lender must release all original papers pertaining to moveable and immovable property and remove any charges that have been lodged with any registry. This must be done within 30 days

Option to choose branch to receive documents
The borrower will have the choice of picking up the original moveable or immovable property documents at the banking establishment where the loan account was serviced or from any other RE office where the documents are available, depending on her or his preference.

Sanction letter
The loan sanction letters issued on or after the effective date will include information on the schedule and location for returning the original moveable and immovable property papers.

When borrower or joint borrowers pass away

The REs must have a clear system in place for returning original moveable and immovable property documents to the legal heirs if the solo borrower or joint borrowers pass away. This policy, along with other related policies and procedures concerning customer information, must be posted on the REs’ website.

Penalty in case of delay
When original moveable or immovable property documents are not released within 30 days of loan repayment or settlement or when a charge satisfaction form is not submitted to the appropriate registrar, the RE is required to explain the delay to the borrower. If the RE is to blame for the delay, it must make up the difference by paying the borrower Rs 5,000 for each day that the delay lasts.

In case of loss, damage to original property documents
In addition to paying compensation as Rs 5000 per day, the REs will assist the borrower in obtaining duplicate/certified copies of any original movable or immovable property documents that have been lost or damaged, whether partially or completely. However, in these situations, the REs will have an additional 30 days to complete this process before the delayed period penalty is determined (i.e., after a total of 60 days).

Source link

Leave a Comment