New Delhi: Providing a big relief to home loan borrowers, the Reserve Bank of India (RBI) on Wednesday issued a set of strict guidelines, directing all the banks to ensure that the registry/property documents of the home buyers are returned within a month after the loan has been repaid.
The RBI has directed lenders including the Regulated Entities (REs), banks & non-banking finance companies (NBFCs) to release the property documents upon repayment of loan within 30 days, failing which they will have to pay Rs 5,000 penalty per day.
The RBI’s stringent guidelines comes on back of slew of complaints & grievances by home loan borrowers, who run from pillar to post to get their property documents released from bank, after repayment of their home loans. The process is a tedious one and call for repeated visit of loan borrowers to banks.
“Any failure to comply with the directive will result in penalty of Rs 5,000 per day,” said the RBI directive.
“In terms of the guidelines on Fair Practices Code issued to various Regulated Entities (REs) since 2003, REs are required to release all movable and immovable property documents upon receiving full repayment and closure of loan accounts,” RBI said in a circular.
The RBI directive will come into effect from December 1, 2023. This leaves the banks with more than 2 months time to streamline their process and prepare for smooth & seamless settlement of dues & documents. In the buffer time zone of 2 months, the banks can get their act together and get the logistics and IT systems placed in order, so that customer grievances are mitigated to large extent in coming years.
Currently, all the banks follow varying practices when it comes to releasing movable/immovable property documents.
From now onwards, the banks & all lenders will have to specify in their sanction letters about the time & place where the property documents of home loan borrowers will be returned. Also, the RBI called for publication of procedure on lender’s website, along with other relevant policies.
