MUMBAI: In a relief for home and personal loan borrowers, RBI has asked lenders to ensure that they return property documents within a month after a loan is repaid. Failure in doing so will require lenders to compensate the borrower at Rs 5,000 per day, RBI’s new guidelines say. The new rules will come into effect for all cases where release of documents falls due on or after December 1, 2023.
This gives banks a little over two months to get their logistics and IT systems in place to ensure there is proper communication and process for releasing documents. Most banks transfer records to a centralised processing centre which is often far away from the branch.
A senior banker said that ensuring documents are available at the sanctioning branch would be a challenge as many branches do not have the file management system and the documents would have to be returned to the regional storage facility if the borrower does not turn up on the appointed day. Banks said that they may have to rejig IT systems so that the regional centre receives the communication to release the documents.
Banks and finance companies have also been directed to ensure that the documents are available at the branch where the loan was serviced or at another office of the lender, depending on the borrower’s preference.
Morever, if there is any loss or damage to the original property documents (partially or fully), lenders must assist the borrower in obtaining duplicate or certified copies and bear the associated costs. In cases where documents need to be replaced for loss or damage, lenders have an additional 30 days to complete the procedure, and the penalty for the delay will be calculated after 60 days.
RBI has issued the directions under responsible lending conduct guidelines, which apply to all institutions including banks, co-operative banks, non-banking finance companies and housing finance companies.

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