Borrower Experiences Transformed: RBI Circular on September 13, 2023

Once upon a time in the world of banking, borrowers often faced a frustrating dilemma: the release of their precious property documents. It was a long-standing issue that left many borrowers tangled in disputes and grievances with regulated entities (REs).

But then, change came in the form of new Direction designed to ensure fair practices and responsible lending conduct. These Directions aimed to simplify the process and grant borrowers their rightful freedom.

Imagine a borrower, Ms. Deshmukh, who had recently repaid her loan in full. In the past, obtaining her original property documents would have been a nightmare. But with the new Directions in place, her experience was about to be different.

Part 1: A Timely Promise

After completing her final loan instalment, Ms. Deshmukh approached the bank for her property documents. To her surprise, the bank handed her a letter detailing when and where she could collect them. The promise was clear - her documents would be released within 30 days, and charges registered with any registry will also be removed within the same timeline.

This newfound transparency brought a sense of relief to Ms. Deshmukh. She now knew exactly when to expect her documents and where to go, which made planning much easier.

Part 2: The Borrower's Choice

Ms. Deshmukh had another reason to smile. The Directions gave her the choice of where to collect her documents - either at the bank branch where she serviced her loan or at another office of the RE. This flexibility meant convenience for borrowers like her.

She opted to collect her documents at the branch she knew well. This choice was hers to make, reflecting the borrower-centric approach these Directions are built upon.

Part 3: A Safety Net for Heirs

The Directions also address the contingency of a borrower's demise. REs will now be required to have a clear procedure for returning documents to legal heirs. This procedure will readily be available on their websites, ensuring transparency and ease of access for grieving families.

The peace of mind that comes with knowing her heirs will not face undue hardships in securing their rights is invaluable to Ms. Deshmukh.

Part 4: Compensation for Delays

However, the Directions don’t just set promises; they also have teeth. In cases where the REs fail to release documents within the stipulated 30 days, they are obliged to compensate the borrower. A penalty of ₹5,000 per day of delay will be imposed, encouraging REs to stick to their word.

Ms. Deshmukh, although hoping she would not need it, felt reassured by this compensation clause. It demonstrates that the Directions are not just words on paper; they carry real consequences for non-compliance.

Part 5: Addressing Loss or Damage

Another significant change is how REs handled loss or damage to documents. In such unfortunate cases, the REs will now have to assist the borrower in obtaining duplicate or certified copies of the documents. They will also be responsible for bearing the associated costs, and to ensure the smooth completion of the document recovery process, the REs will be granted an additional 30 days.

This protection means that even in the worst-case scenario, borrowers like Ms. Deshmukh can recover their documents and related expenses without hassle.

Part 6: Applicability of the Directions

These Directions are not mere suggestions. They apply universally to all cases where the release of original property documents is due on or after December 1, 2023. The new standards are set, and borrowers can expect nothing less.

In the end, Ms. Deshmukh can receive her property documents promptly and without any issues. She marvelled at how a set of Directions had transformed her experience, making it simpler, fairer, and more transparent.

This was not just Ms. Deshmukh’s story; it was the story of countless borrowers who, thanks to the new Directions, can breathe easier and focus on their financial well-being, free from the distress of endless disputes and delays.

The moral of the story:

Fair practices and responsible lending are not just buzzwords; they are the cornerstones of a more equitable financial world, where borrowers and lenders can thrive together.