11 hrs ago
RBI Sets ₹5,000 Daily Compensation for Delayed Property Papers
Paying your final home-loan EMI does not finish all the paperwork.
The lender must return your original property papers and remove its charge on the property.
Under Reserve Bank of India rules, this generally must happen within 30 days after the loan is fully repaid or settled.
The lender can let you collect the papers from a servicing branch or another designated office.
If the lender causes a delay, it must pay you ₹5,000 for every extra day.
The lender must also tell you why the delay happened.
If your papers are lost or damaged while with the lender, it must help you get duplicate or certified copies.
The lender must pay the related costs.
In these cases, an additional 30 days is allowed before delay compensation is calculated, making the total period 60 days.
Lenders must return original property documents and remove registered charges within 30 days of full loan repayment.
The framework applies to regulated entities, including banks and NBFCs, for applicable cases from December 1, 2023.
A lender responsible for delay must pay the borrower ₹5,000 for each day beyond the 30-day deadline.
Lenders must explain delays and specify document-return timelines and locations for applicable loans.
If documents are lost or damaged, lenders must help obtain replacements and bear the related costs.
- Who
- Borrowers with loans for which a regulated lender holds original property or collateral documents, and banks or NBFCs regulated under the framework.
- What
- Lenders must return original documents and remove registered charges within 30 days after full repayment or settlement, or pay compensation for attributable delays.
- Where
- Documents may be returned through the servicing branch or another designated office, while charges must be removed from the relevant registry.
- When
- The directions were issued on September 13, 2023, and apply to applicable cases from December 1, 2023.
- Why
- To prevent delays in completing loan-closure formalities after borrowers repay their loans.
Key facts
- Deadline
- 30 days after full repayment or settlement of the loan
- Delay compensation
- ₹5,000 for each day of delay attributable to the lender
- Required actions
- Return original property or collateral documents and remove registered charges
- Delay explanation
- The lender must communicate the reason for a delay
- Lost or damaged documents
- The lender must assist with duplicate or certified copies and bear associated costs
- Extended timeline
- For lost or damaged documents, an additional 30 days is allowed before compensation is calculated
- Effective date
- Applicable cases from December 1, 2023
Quotes
Reserve Bank of India
India’s central bank, which issued the directions on returning property documents after loan repayment
“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 where the delay is attributable to the RE, it shall compensate the borrower at the rate of ₹5,000/- for each day of delay.”
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Sources
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