September 18, 2023

RBI’s new rules ensure faster release of property documents for borrowers

Satya Sontanam | Personal Finance

If you have a home loan or a loan against any property/security, then you have a reason to smile. 

RBI, on September 13, 2023, came out with a notification stating that banks and NBFCs (non-banking financial company) must release all the movable or immovable property documents given as collateral within 30 days from the day the borrower fully repays or settles the loan.

In this story, let’s delve into what this is all about.

Disputes in the past

When you take a home loan, the security is typically the property itself by way of depositing the title deeds. For other personal loans, banks also accept life insurance policies (which have a surrender value), shares/securities and investments like NSC (National Savings Certificate) etc. as collateral.

When a loan is settled by the borrower, different banks have been following different practices of releasing such documents and there were customer grievances and disputes. Imagine settling a loan with the bank/NBFC but property still under mortgage.  

RBI wants to streamline the process of releasing documents that are due from December 1, 2023.

Here’s what the RBI says

  1. The documents must be released by the lender within 30 days of loan closure. No encumbrance after that. 

      2. Borrowers will have an option to collect those documents either from the branch office where the loan was sanctioned or any other office where the documents are available.

      3. The timeline and place of return of such documents has to be mentioned by the lender in the loan sanction letters.

      4. Lenders must have a standard procedure on how to return the documents to legal heirs, when the borrower or joint borrowers die. 

      5. In case of delay in releasing documents, the bank/NBFC has to pay a fee to the  borrower – ₹5,000 for each day of delay.

      6. If there is a loss/damage to documents, the lender must assist you in getting the duplicate/certified copies by covering the extra charges. In this case, the 30 days limit will be extended by another 30 days. If there is a delay even after 60 days, the lender will be liable to pay Rs 5,000 per day until the documents are returned to the borrower.

Note that NBFCs also include housing finance companies (HFCs). With RBI rules coming into effect from December 2023, you are expected to have a smooth experience in getting your property/security released from mortgage. 

 


39 comments

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  1. Gangadharan Muraleedharan says:

    Dear Sir/Masam,

    This is my greavance considered large number of browsers facing sevior problem from your banks.

    Kerala HC ordered prior title deed is not necessary for transfer of property based on the judgement sub registrars cannot demand old title deed and the registrars now not demanding old title deed for property registration

    All your bank aware of HC directive keep on asking to submit old title deed)munadharamm)

    I request you to verify the above if my plea is genuine please direct your bank,s urgently

    Regards,

    GMuraleedharan
    An NRI

  2. AJ says:

    I have an example in my family where we haven’t recived the documents from bank yet. We cleared the loan 4 years back but now the bank has lost the original documents.
    So does that mean we will get ₹5000*365days* 4 years
    And the bank is liable to pay this compensation?

    I am confused the ₹5000 per day starts from Dec1st or is it considering the from the due date that is 4 years before. Appreciate if you explain this

    • Satya Sontanam says:

      Hello AJ,

      As per the RBI notification, the “directions shall be applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023.”

      Going by that, I don’t think this rule will be applicable in your case since the documents were due to be given before Dec 1, 2023.

      Having said that, I urge you to check with your bank again to confirm.

  3. SG says:

    Hello Team,

    I have transfered my loan from SIB to another bank. My property is in kerala hence took home loan in the same city. Iam in Maharashrtra and due to some reason, iam not able to go to Kerala to collect the title deed. Sib manager is admanant that they will handover the deed to owner and dont have any other option.

    Hence wanted to confirm if there is any other option where the deed can be transfered to relative or current banker who have taken over the loan.

    • Satya Sontanam says:

      Dear SG,

      The RBI notification outlines how the borrower can collect the documents from the bank.

      One of the points says “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 bank where the documents are available, as per her/his preference.”

      Here is the link to the RBI notification – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12535&Mode=0

      Maybe, you can check with your bank if the documents can be collected from any of the branches in Maharashtra.

  4. BALU says:

    Sir, I have closed my loan during Feb 2023 but yet I have not received the documents and reason for it. Whether I am eligible under this RBI circular.

  5. Pankaj says:

    RBI circular will be applicable for Balance Transfer (BT) cases as well where there is delay in providing documents from first lender.

    • Satya Sontanam says:

      Hi Pankaj,

      Yes, it should be available. The RBI notification says the the documents must be released within a period of 30 days after full repayment/ settlement of the loan account. Balance Transfer cases can come under ‘settlement of loan’. Please check with your lender regarding the same.

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