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Banks will pay Fine of 5000 per day for delay in Returning of Property Documents to Borrowers

Banks generally creates hassles while Returning the Original Property Papers to the Home Loan Borrowers even after payment of Loan. Therefore, to ease the life of Borrowers and make Lending Institutions including Banks Accountable, RBI has issued directive vide DoR.MCS.REC.38/01.01.001/2023-24 dated 13-09-2023 that Banks will Return the Original Property Documents to the Borrowers & Remove the charges registered with any registry with in 30 days after full repayment/settlement of the Loan Account. In case, Banks fails to Return the original paper with in 30 days, Banks will be liable to pay the compensation to the Borrower. at the rate of Rs. 5,000 Per Day for the period of delay.

Other Key Points of the Directives

The REs (Regulated Entities of RBI like Banks, NBFC etc. 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 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 will be mentioned in the loan sanction letters issued on or after the effective date.

In order to address the contingent event of demise of the sole borrower or joint borrowers, the REs shall have a well laid out procedure for return of original movable / immovable property documents to the legal heirs. Such procedure shall be displayed on the website of the REs along with other similar policies and procedures for customer information.

In case of loss/damage to original movable / immovable property documents, either in part or in full, the REs shall assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents and shall bear the associated costs, in addition to paying compensation as indicated at paragraph 6 above. However, in such cases, an additional time of 30 days will be available to the REs to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).

The compensation provided under these directions shall be without prejudice to the rights of a borrower to get any other compensation as per any applicable law.

These Directions shall be applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023.


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Note: This article is purely for informational/academic purpose.

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