RBI has said that banks and NBFCs will have to release property documents withing 30 days of repayment of a loan

In a big relief for borrowers, the Reserve Bank of India informed that banks and Non-Banking Financial Corporations have to release documents of properties and collateral mandatorily within 30 days of settling a loan. * Have to remove encumberance within 30 days, and return docs * Docs can be returned from any branch, not just home branch of customer * Loan docs must… pic.twitter.com/VuLioLpuV5 — Deepak Shenoy September 13, 2023 The official notification issued on 13 September states, “In terms of the guidelines on Fair Practices Code issued to various Regulated Entities since 2003, REs are required to release all movable/immovable property documents upon receiving full repayment and closure of loan account. “The REs shall release all the original movable/immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan account.” The RBI also announced the a fine of ₹5,000 per day in case of delay in returning the property docyments, if the lender is responsible for such delay. The notification states, “in case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan, the RE shall communicate to the borrower reasons for such delay. The timeline and place of return of original movable/immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date.” As per the RBI regulation, the REs shall have a well-defined mechanism for returning original movable/immovable property documents to the legal heirs in order to meet the contingent event of the death of the sole borrower or joint borrowers.