RBI has also issued a circular in this regard. While giving relief to the loan holders, RBI has also made a provision for penalty on banks for not following the rules. If the instructions issued by RBI are not followed, then the units falling under its purview will have to pay damages at the rate of Rs 5,000 per day.
Keeping in mind the interest of the borrowers, the Reserve Bank of India (RBI) has taken a big step. The Reserve Bank of India (RBI) on Wednesday, September 13, has instructed banks and other lenders that they will have to return the original documents of the loan holders within 30 days of completion of the loan payment.
RBI has also issued a circular in this regard. While giving relief to the loan holders, RBI has also made a provision for penalty on banks for not following the rules. RBI said in a notification that if any bank does not comply with the instructions issued by RBI, then the units under its purview will have to pay damages at the rate of Rs 5,000 per day.
It is noteworthy that many financial institutions adopt different approaches in issuing such movable or immovable property documents. Such behavior increases customer complaints and disputes. RBI said, “In order to ensure fair practice and uniformity, banks and other financial institutions under its purview shall retain all original documents relating to movable or immovable property within 30 days of repayment/settlement of the entire loan amount.” Will be returned to the concerned borrower within. Also, whatever charges are registered, they will be removed.
Borrower will have to give information
The central bank said that if there is any delay, the institutions will inform the concerned borrower about the reason for the same. RBI, in a notification issued to all banks and financial institutions under its purview, has said that borrowers will be given the option to collect the original movable/immovable property documents as per their preference either from the bank branch where the loan account is operated. or from any other office of the concerned unit where the documents are available. The deadline and place for return of original documents of movable/immovable property will be mentioned in the loan sanction letters.
RBI has also said that in case of death of the borrower or joint borrower, the financial institutions will keep in advance the procedure for return of the original documents of movable/immovable property to the legal heirs. Such procedure shall be displayed on the website along with other similar policies and procedures for the information of the customers. The notification states that in the event of loss or damage of original documents of movable/immovable property, the concerned financial institution will assist the borrower in obtaining duplicate/certified copies of such documents and will bear the associated cost along with paying the damages. Will also pick up. “However, in such cases, financial institutions will have an additional period of 30 days to complete the process and the compensation will be calculated thereafter,” it said. That is, the compensation will need to be paid after a total period of 60 days.” RBI said that these instructions will be applicable to all cases where the original movable/immovable property documents are to be issued on or after December 1, 2023.
The order will apply to these
According to the information, NBFC, Housing Finance Institution, Asset Reconstruction Company, Regional Bank, Cooperative Bank will have to follow this new notification. According to the notification, if for any reason the banks delay in giving the original documents, then they will have to explain the reason to the loan holder.