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Release of Documents on Closure of Personal Loans

Reserve Bank of India (RBI) has issued directions for release of movable / immovable property documents on repayment / settlement of personal loans.

What is personal loan?

Personal loan refers to a loan given to individual and consists of –

  • Consumer credit
  • Education loan
  • Loan given for creation / enhancement of immovable assets (e.g., housing, etc.)
  • Loan given for investment in financial assets (shares, debentures, etc.)

What are the direction on release of movable / immovable property documents?

  • The Regulated Entities (REs) shall release all the original movable / immovable property documents and remove charges registered with any registry within 30 days after full repayment / settlement of the loan account.
  • 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 RE where the documents are available, as per her / his preference.
  • The timeline and place of return of original movable / immovable property documents shall be mentioned in the loan sanction letters issued on or after December 01, 2023.
  • The REs shall have a well laid out procedure for return of original movable / immovable property documents to the legal heirs in the event of demise of the sole borrower or joint borrowers. 

What if documents are not retuned within specified timelines?

  • 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. 
  • In case the delay is attributable to the RE, it shall compensate the borrower at the rate of ₹5,000/- for each day of delay.

What if original documents are lost / damaged? 

  • In case of loss / damage to original movable / immovable property documents, the REs shall assist the borrower in obtaining duplicate / certified copies of the movable / immovable property documents and shall bear the associated costs.
  • In such cases, an additional time of 30 days will be available to the REs to complete this procedure (i.e. total period of 60 days).
  • The RE shall also compensate the borrower at the rate of ₹5,000/- for each day of delay.

From when are the directions applicable?

The directions shall be applicable to all cases where release of original movable / immovable property documents falls due on or after December 01, 2023.


References

Reserve Bank of India. (2018, January 04). 'XBRL Returns - Harmonization of Banking Statistics'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11199&Mode=0

Reserve Bank of India. (2023, September 13). 'Responsible Lending Conduct – Release of Movable / Immovable Property Documents on Repayment/ Settlement of Personal Loans'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12535&Mode=0


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