Borrowers To Get Rs 5,000 A Day, For Delayed Documents, RBI Directives To Lenders (Image: X.com/@RBI)
The Reserve Bank of India (RBI) has issued a circular which directs the lenders to return the documents of the borrowers within 30 days after the full repayment of loan or else pay a penalty of Rs. 5000 per day. This issue comes as a move to safeguard the interest of the borrowers and to bring in responsible lending conduct at the part of the lenders.
The directions comes into force on December 1, 2023, and would also be applicable to cases due on December 1, 2023.
The RBI notification released on September 13 said that, “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.”
The directive applies to all Commercial Banks, including Small Finance Banks and Regional Rural Banks, excluding Payments Banks; all Local Area Banks, all Primary (Urban) Co-operative Banks, all State Co-operative Banks and District Central Co-operative Banks, all NBFCs (including HFCs) and to all Asset Reconstruction Companies.
All these Regulated Entities (RE) are to return the original documents and also remove any charges registered with any registry, within a time period of 30 days from the payment of the full amount by the borrower.
The borrower would have the option of collecting the documents, either from the bank branch from where the loan was taken or from any other office of the RE, where the documents are available, as per his/her preference.
In case of demise of the borrower or joint borrowers, the RE should have a well laid out procedure for the return of the documents to the legal heirs, which should be made available on the RE’s websites, policies and procedures so that the customer/borrower stays informed.
For the RE’s, in case of any delay in returning the documents after 30 days, the RE should let the borrower know of the delay and if the delay is from the part of the RE, it has to compensate the borrower with Rs 5000 for each day of the delay.
If the case of any damage or loss of documents from the RE, they should aid the borrower in obtaining the duplicate documents, should bear the cost of it and also, should pay the compensation. A 30-day period will be given for the RE with the compensation calculated thereafter.
