Post loan payment: Banks told to return property papers promptly

Mumbai: The Reserve Bank of India (RBI) on Wednesday directed banks and financial institutions to release all original movable or immovable property documents and remove charges registered with any registry within 30 days after full repayment of a loan by the borrower.

Failing to comply with the direction, Regulated Entities (REs) would compensate the borrower at the rate of Rs5,000 for each day of delay, RBI said in a notification. RBI noted that REs follow divergent practices in release of such movable or immovable property documents leading to customer grievances and disputes.

As part of Fair Practices Code and to make things uniform, RBI asked “REs to release all the original movable/immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/settlement of the loan account.” In case of delay in doing so, it said, the RE would communicate to the borrower reasons for such delay. The borrower shall be given the option of collecting the original property documents either from the bank or any RE office.