Reserve Bank Of India has issued Circular bearing no. DoR.MCS.REC.38/01.01.001/2023-24 dated. 13.09.2023 wherein it has clarified that whenever the Loan account is closed, then Bank is required to release all Movable/ Immovable property documents upon receiving full repayment and closure of Loan account.
Responsible Lending Conduct – Release of Movable / Immovable Property Documents on Repayment/ Settlement of Personal Loans *
In terms of the guidelines on Fair Practices Code issued by Reserve Bank of India to Banks since 2003, Banks are required to release all movable / immovable property documents upon receiving full repayment and closure of loan account. However, to follow the Fair Practice Code and Similar practice it has been observed that due to divergent practices in release of such movable / immovable property documents leading to customer grievances and disputes.
Release of Movable / Immovable Property Documents:-
1. The Bank 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.
2. 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 Bank where the documents are available, as per her / his preference.
3. 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.
4. In order to address the contingent event of demise of the sole borrower or joint borrowers, the Bank have a well laid out procedure for return of original movable / immovable property documents to the legal heirs.
Applicability:-
These Directions shall be applicable to all cases where release of original movable / immovable property documents falls due on or after December 1, 2023.
For more details, you are requested to contact your Home Branch.
