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–
- 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.
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
This complain does not belong here, please file it with your banker 🙂
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
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.
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.
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.
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.
You will be. Please talk to the bank or NBFC from whom you’ve availed the loan.
Balu, We are are not aware of your specific situation. But for any complaints against banks, one can reach out to RBI Ombudsmen
RBI circular will be applicable for Balance Transfer (BT) cases as well where there is delay in providing documents from first lender.
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.
We cleared all dues in June/July 2023 for our home loan against property, I have been asking the bank to give me all the documents. I had to follow up every time, after a month they sent a number of advocate to release lien on the property. She asked me to pay Rs 3500 for the same. And the bank manager got transferred, so I had to talk with the new manager about everything. Can you please tell me who pays the mortage release charges? And can I claim the above mentioned money from the bank for not releasing the documents?
Hi Pranay,
Regarding the charges mentioned by you, please go through the sanction letter for terms and conditions. You can request the bank to give you all the details. Coming to your second question, the notification here talks about all cases where release of original movable / immovable property documents falls due on or after December 1, 2023. Thus, I am afraid you cannot claim money for delay in releasing the documents. Having said that, you can bring this up in your communications with the bank.
What is the procedure for getting the housing title deeds even after closing the entire loan amount if the Bank doesn’t return the documents. The Bank didn’t even inform the reason for the documents not returned, after the closure of loan during Mar 2022. Can I claim according to this RBI CIRCULAR. Please guide me properly.
Hi Balu,
The notification that is referred to in the story is applicable for release of documents that fall due on or after December 1, 2023. So, I am afraid this is not applicable in your case. However, please talk to your bank and get an understanding of why the documents have not been released. If it is from a public sector bank, you can refer to the following announcement by the finance minister in 2019 regarding release of documents.
https://x.com/PIB_India/status/1164878933084389376?s=20
Hi
My farther has taken lone from bank and he passed away and I had cleared his loan amount from my account and bank is no willing to handover the property papers to me they are asking for succession certificate or will probate after that they will hand over to me the property papers in this case what should I do please help me
Thank you
Hi Fahad,
Sorry to hear that. This RBI notification just states that the banks must have well laid out procedures for return of original property documents to the legal heirs. Thus, each bank may have its own procedure in handling such scenarios. In general, most banks ask for legal representation (such as Succession Certificate, Will, Letter of Administration) to release documents to legal heirs.
After closing the loan can I pay any amount as document charges to get the original documents
Hi Ashok,
Generally, none. However, it depends on the terms and conditions of the mortgage you entered into.
Hi,
I have transferred my loan from one bank to another.. As per the settlement or NoC date, I was supposed to get documents in first week of feb.. it is delay by around 10 days.. Am I eligible for this ? If yes, where should I raise the compliant.
Thanks
Hi SA,
As per the RBI notification, it is applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023. If you think, there is a delay and a need to be compensated, please talk to your bank directly.
Sir I have purchases house the property documents of which are kept in a bank as a security against a Loan The Loan account has been closed and I had paid the Loan Amount through Loan drawn from other bank and while making payment now the question is who will be handed the documents i.e. myself, the bank or owner who has sold the property to me.
Hi Srinivas,
As far as our understanding goes, the property documents have to be handed over to you. Please check with your bank for the terms and conditions.
Sir, Based on this circular I have issued a legal notice by an Advocate, but even then the Bank branch has not responded nor give any reply to me in this regard. What is the next procedure for getting the housing title deeds.
Sir,
What is the cut-off date for closing the loan account.
What is the eligible date for getting the penalty amount. Whether from 1 Dec or from the date of closure if it before Dec.2023.
Hi Balu,
These RBI directions are applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023.
We had taken Rs 9 lacs loan on fixed term for 18 yrs and on fixed rate of interest @ 8.25/00 Accordingly EMI was worked out at Rs 8010/00 ( total 216 instalments) From October 2004 till October 2022 . Last instalment was paid in October 2022. 16 months have passed after the last instalment was paid. Inspite of so many requests and reminders bank is yet to return our security documents. Please advise.
Manohar Badlaney 9867179453
Hi Manohar,
Please check with your bank on what the reason is for the delay in submitting papers. You can also refer to this RBI notification https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12535&Mode=0
Hello Team,
I have transferred my loan from THFL to another Axis bank. My property is in Ahmedabad hence took home loan in the same city. my Father & Mother in Deed they will settel in Odisha and due to some reason, they not able to come to Ahmedabad to collect the title deed. THFL manager is adamant that they will handover the deed to 3 owner and dont handover to me ( Main Applicant).
Please give me suggest me.
Hi Rajan,
I am afraid we can’t comment on it. It all depends on the terms and conditions mentioned in the loan document.
Sir
Anyone moved in this regard and get the title deeds with penalty as per RBI circular in the recent times. Please inform.
Hi Balu,
I am afraid we wouldn’t know that.
My In-laws had borrowed loan against property from Union Bank and even after more than a month the bank is not release the property documents.
Instead, they are demanding 45k for the documents to be released from court.
Please advise what step can a take to get the property documents released asap.
Hi Syed,
I am afraid we cannot comment on this. Please check with your bank on what the reason is to withhold the documents and why those papers are with the court. Thank you.
Hello if the nbfc lost the document what are documents nbfc must give to the customer to re-create the document
Hi Marappan,
As per the RBI notification mentioned in the story, in case of loss/damage to original property documents, the lender shall assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents. The associated costs have to be borne by the lender only. This is in addition to the compensation that the lender has to pay for delay in handing over the documents.
Hi, does this rule apply to properties owned by directors of a company, which were mortgaged by directors to secure bank guarantee limit for company?
Hi Anand,
As per my understanding, there is no bifurcation between corporate borrower and individual borrower. The notification used words such as ‘loan account’ and ‘borrower’.
Company secretaries are the right ones to answer this question.
I had a cc loan on my brother’s gst but property was mine.he is not paying the emi for last 2year when I got to know about this issue.l was unable to reply that loan amount.bank also merged my vehicle loans with this property.and try to sell my property on auction.so I files a case on DRT court.letter on by the OTS i have cleared all the loans.but after that they asked my DRT NOC for withdrawal the case it takes 2month to withdraw.now I have submitted the paper .but still bank not listing me and give excuses for releasing my paper.so what to do now..I have cleared all my dues on March 12 2024.
Hi Rajiv,
This is a very specific case and we will not be able to answer your query. We urge you to check with your bank again to get specific reasons as in why the documents are held despite repaying the loans. If you don’t get any response after repeated follow ups, you have the option lodge a compliant against the entity with RBI here – https://rbi.org.in/Scripts/Complaints.aspx
Will this provision be applicable if bank do not return the property papers even after revocation of sanction letter?
We are not sure about that, Ekta. This notification only talks about release of property documents upon receiving full repayment and closure of loan account.
My husband has provided guarantee and executed MOD for the house for the loans availed by his sisters family from Bank. Now my husband has expired and we have no knowledge of the business of my husband’s sister family. How can i release the property from the bank ?
Hi Vatsala,
The story is not about providing guarantee for a loan, it’s about collateral loans.
I am afraid we wouldn’t be able to answer that question. Withdrawing guarantee depends on the terms of the agreement.
I put my house documents for a loan to run my partnership firm.
If there is a closing of a loan to whom the documents will give?
It shall be handed over to you only, Ranjith
I have taken home loan of Rs 9 lacs from Corporation bank in October 2004 on fixed rate of interest for 18 yrs. Sanction letter and agreement indicates fixed term of 216 months and EMI of 8010/00 .i have paid the last instalment I October 2022. Inspite of so many reminders,bank has not released the original documents.(it got merged with UBI. ) Please advise whom to approach for recovery of documents and compensation as per RBI circular, Rs 5000/00 per day after 30 days of last loan instalment paid. 9867179453
Hi Manohar,
If the loan is settled and all the terms and conditions are complied with, your bank is supposed to deliver the documents to you. Refer this circular in subject to bank to let them know that you are aware of you rights. If you do not receive any communication in reasonable time, you can consider raising a compliant to the RBI Ombudsman
– https://rbi.org.in/Scripts/Complaints.aspx
In case the loan is closed but the customer didn’t turn up to collect the documents will the bank be liable to pay the amount.
Hi Ravi,
No, I don’t think that case would be covered under this notification. These rules are likely applicable if the bank is at fault.