The Reserve Bank of India (RBI) vide Notification, RBI/2023-24/60, dated 13.09.2023, focuses on responsible lending conduct, particularly concerning releasing movable and immovable property documents upon repayment or settlement of personal loans.
The circular has issued guidelines to address the problems the borrowers face and encourage responsible lending behaviour among REs. The genesis of these directives lies in the wide-ranging disparities witnessed in releasing property documents across various REs. These inconsistencies have generated an avalanche of customer complaints and disputes. The RBI's decisive action seeks to standardize this process and promote a uniform culture of responsible lending conduct, thereby mitigating the frustrations borne by borrowers due to operational discrepancies.
The RBI continues to uphold its commitment to ensuring fair and transparent practices in the banking sector. This Notification is a reflection of that commitment and specifies the following directions for the REs:
The notification will benefit the borrowers by ensuring timely and hassle-free release of their movable/immovable property documents after loan repayment or settlement. It will also provide them with adequate compensation in case of any delay or loss/damage caused by the REs. Moreover, it will enhance transparency and accountability among the REs and foster customer trust and satisfaction.
This Notification has significant legal implications for customers who have availed personal loans from banks. It mandates banks to release all documents related to movable and immovable properties immediately upon repayment or settlement of personal loans. This is a legally binding obligation on the part of the banks.
The RBI's new Notification is a step towards enhancing transparency and fairness in lending practices. It ensures that customers' rights are protected and that they have access to their property documents promptly after loan repayment.