What changed
RBI has issued a directive under the Fair Practices Code requiring regulated entities to release all original movable/immovable property documents within 30 days of full loan repayment or settlement. Lenders must also remove charges from registries within the same period. Borrowers can choose where to collect documents, and loan sanction letters must specify the timeline and place of return.
What it means for you
Banks and NBFCs must overhaul their document release processes to meet the strict 30-day deadline or face daily penalties of ₹5,000 for delays. This increases operational pressure on back-office teams handling document storage and registry filings. Lenders also need to prepare for legal heir procedures and bear costs if documents are lost or damaged.
What you must do
- Update loan sanction letters to include the 30-day document return timeline and collection location options.
- Establish a streamlined process to release documents and file charge satisfaction forms within 30 days of loan closure.
- Create and display a clear procedure on your website for returning documents to legal heirs in case of borrower demise.
- Set up a compensation mechanism to pay ₹5,000 per day for any delay attributable to the bank, and budget for duplicate document costs if originals are lost.
- Train branch and operations staff on the new timelines and borrower communication requirements.
Who it affects
All commercial banks including SFBs and RRBs, Local Area Banks, Primary Urban Co-operative Banks, State and District Central Co-operative Banks, NBFCs including HFCs, Asset Reconstruction Companies
What happens if the bank loses my original property documents?
The bank must help you get duplicate or certified copies at its own cost, and also pay compensation of ₹5,000 per day for each day of delay attributable to the bank after a total period of 60 days from loan closure.