New Delhi: If the Reserve Bank of India (RBI) accepts the recommendations of the high-level committee, banks may have to compensate borrowers and also pay a penalty if they lose the original property documents of loan seekers.
The RBI had formed a high level committee, led by its former governor BP Kanungo, in May last year to review customer service standards in banks and other lending institutions and to suggest measures to improve the customers’ facilities.
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Officials of the RBI said that the panel has submitted its recommendations in April this year. Compensation to the loan seekers in lieu of any mishap with original property paper is one of the recommendations that the panel had made.
The RBI has invited comments from stakeholders by July 7 on the committee’s recommendations.
The high power committee has suggested that the RBI may consider stipulating a time limit for banks to return the property documents to the borrower from the date of closure of the loan account, failing which a penalty or a compensation linked to the extent of delay should automatically be paid by the banks to the borrower.
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“In case of loss of property documents, the bank should not only be obligated to assist in obtaining certified registered copies of documents at their cost but also compensate the customer adequately, keeping in view the time taken to arrange the alternate copies of the documents,” the panel has suggested.
Normally banks request for original property documents and keep them until the loans are fully repaid. However these recommendations have come as the RBI has received several complaints that banks take a lot of time to return property documents even when the loan has been repaid on time.
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Original property documents are essential, as they help in establishing ownership and preventing disputes. In addition to this, these documents are also useful in facilitating future transactions and in other property related matters.
Ownership documents like title deed, serve as legal validation of one’s property ownership. Holding these documents in their original form also reduces the risk of potential disputes or fraud in the future.
