Reetu | Sep 13, 2023 |
Bank to be penalised if Registry Paper not given within 30 days of repayment of loan
The Reserve Bank of India (RBI) has issued a notification regarding Repayment/ Settlement of Personal Loans.
After repaying the home loan, there will be no pressure to get the registry paper back from the bank. The registry paper will have to be returned to the bank within 30 days. Otherwise Rs.5000/day compensation will have to be paid.
The Official Notification Stated as:
In terms of the guidelines on Fair Practices Code issued to various Regulated Entities (REs) since 2003, REs are required to release all movable / immovable property documents upon receiving full repayment and closure of loan account.
However, it has been observed that the REs follow divergent practices in release of such movable / immovable property documents leading to customer grievances and disputes.
To address the issues faced by the borrowers and towards promoting responsible lending conduct among the REs, the following Directions are being issued:
The REs shall 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.
The borrower shall be given the option of collecting the original movable / immovable property documents either from the banking outlet / branch where the loan account was serviced or any other office of the RE where the documents are available, as per her / his preference.
The timeline and place of return of original movable / immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date.
In order to address the contingent event of demise of the sole borrower or joint borrowers, the REs shall have a well laid out procedure for return of original movable / immovable property documents to the legal heirs. Such procedure shall be displayed on the website of the REs along with other similar policies and procedures for customer information.
If the RE fails to release original movable / immovable property documents or fails to file charge satisfaction form with relevant registry within 30 days of full repayment/settlement of loan, it shall communicate to the borrower the reasons for such delay, and if the delay is attributable to the RE, it shall compensate the borrower at the rate of Rs.5,000 for each day of delay.
In case of loss/damage to original movable / immovable property documents, either in part or in full, the REs shall assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents and shall bear the associated costs, in addition to paying compensation as indicated at paragraph 6 above. However, in such cases, an additional time of 30 days will be available to the REs to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).
The compensation provided under these instructions is without prejudice to a borrower’s right to other compensation under applicable law.
These Directions shall be applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023.
The above Directions are issued under sections 21, 35A and 56 of the Banking Regulation Act, 1949, sections 45JA and 45L of the Reserve Bank of India Act, 1934, and section 30A of the National Housing Bank Act, 1987.
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