The RBI said original property documents must be returned within 30 days of borrowers settling their personal loans. Else, they will be eligible to be compensated.
Acting on feedback from borrowers about the harassment faced at the hands of some banks and lending firms while getting their property documents back after paying off loans, the Reserve Bank of India has stepped in.
The directive issued to banks on September 13, asked them to release all movable or immovable property documents upon receiving full repayment and closure of the loan account. RBI guidelines emphasised the prompt release of property documents post-loan settlement will help safeguard genuine borrowers’ interests
This directive applies to all commercial banks including small finance banks and regional rural banks, all primary (urban) cooperative banks, all state cooperative banks and district central cooperative banks, all NBFCs and all asset reconstruction companies.
These measures are applicable to all cases where the release of original property documents falls due on or after December 1, 2023. This is expected to end the arbitrary procedures that various lenders are said to follow when it comes to returning property documents against loans.
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