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Buying a house is the biggest life goal of every common Indian family. To realize this dream, people pay half of their life’s earnings to banks in the form of home loan monthly installments i.e. EMI. After years of hard work, financial discipline and sacrifice, when the last rupee of the home loan is repaid, the biggest relief and peace that the family waits for is to have the original and legal documents of their property i.e. the original title deed in their hands. But it is often seen that as soon as the loan is exhausted, banks become careless towards the customers and force them to visit the branches for months for their own property documents. To curb this arbitrariness, the Reserve Bank of India i.e. RBI has implemented very strict rules, under which now even a day’s delay by the banks is costing them dearly.
The Reserve Bank of India has issued detailed guidelines for all commercial banks, public and private banks, regional rural banks, co-operative banks and non-banking financial companies i.e. NBFCs across the country. The central bank has clarified that as soon as a borrower settles his loan account in full and all dues are cleared, it becomes the statutory responsibility of the bank to safely hand over all the original movable and immovable property documents of the customer within 30 calendar days. This rule is not only applicable on home loans, but is also fully effective on mortgage loans, personal loans taken against property, business loans and vehicle loans. In any city of the country, be it Lucknow, Kanpur, Delhi, Mumbai, Patna or Bengaluru, it is mandatory for the local branches to follow this central rule 100 percent.
Under the amended Fair Practices Code of RBI, if the bank or financial institution fails to return the original property documents to the customer within 30 days of the full repayment of the loan, then it will have to pay a compensation of Rs 5,000 to the customer for every day of delay. The bank cannot avoid this compensation by making any kind of exemption or excuse. For example, if the bank takes 40 days to return the documents after closing the loan of a customer, then for the delay of additional 10 days the bank will have to deposit a compensation amount of fifty thousand rupees directly into the customer’s bank account without any hesitation. RBI has made it clear that the delay period will start counting from the day the lender received the last due amount.
In many cases, banks try to explain themselves away by arguing that the documents are not found in their central record room or have been lost somewhere during transfer. Even in this serious situation, RBI has fully protected the rights of consumers. If the customer’s sale deed, registry or other documents are lost from the bank, the bank must immediately inform the customer officially. After this, the bank will have to get certified copies of all those documents from the local sub-registrar office, concerned development authority or municipal corporation at its own expense. Along with this, the bank will also have to issue public notice and FIR of missing person in major newspapers at its own expense. The bank gets a maximum of 30 additional days to complete this entire process. If the certified documents and legal protection letter are not handed over to the customer even after a total of 60 days, a daily penalty of Rs 5000 will be re-imposed from the 61st day.
Whenever you close your loan account completely, do not rely only on verbal assurances. First of all, obtain No Dues Certificate i.e. NDC or No Objection Certificate i.e. NOC from the bank. While taking the loan, the bank must have given you a receipt called List of Documents i.e. LOD, in which the details of all the papers submitted are recorded. While taking back the property, physically check each of the documents in that list, such as original sale deed, deed of sale, title deed, allotment letter, possession letter, map and previous ownership documents, one by one. Apart from this, it is also mandatory to ensure that the bank has removed its mortgage entry from the Central Registry of Securitization Asset Reconstruction and Security Interest i.e. SARFAESI and SARSAI portal and has filed the encumbrance certificate at the local registry office.
If more than 30 days have passed since the last payment of your home loan and your local bank branch is being coy, then first of all send a formal written letter or email to the branch manager of the bank, clearly mentioning the date of loan closure, proof of zero outstanding and RBI’s 30 day rule and compensation of Rs 5000 per day. Be sure to keep the receiving copy or acknowledgment from the branch safely. If no concrete solution and compensation is received at the branch level within 15 to 30 days, then take up the matter with the Principal Nodal Officer of the bank.
If a satisfactory response is not received from the nodal officer or the bank refuses to pay compensation even after the 30-day deadline has passed, the customer should directly file a complaint under the Integrated Ombudsman Scheme of the Reserve Bank of India. For this, online complaint can be lodged by visiting the official complaint management portal of RBI i.e. CMS portal (cms.rbi.org.in). Customers can also get guidance by calling the toll-free number 14448. While filing complaint on the portal, attach copies of loan sanction letter, final no dues receipt, LOD and letters sent to the branch. RBI Ombudsman takes immediate cognizance of this matter and not only directs the bank to hand over the documents immediately, but also passes a statutory order to pay full compensation of Rs 5000 to the customer for every day of delay. Customers should be aware of their rights and instead of silently tolerating the arbitrariness of any bank, take the help of legal rules.