By News Desk 
New Delhi, June 4, 2025 — In a significant move aimed at protecting the rights of borrowers, the Reserve Bank of India (RBI) has introduced new rules to prevent delays and irregularities by banks and NBFCs in returning mortgaged property documents after loan repayment. These reforms are expected to benefit millions of borrowers across the country.
Key Takeaway: Compensation of ₹5,000 Per Day for Delays
Under the new guidelines, if a borrower repays their loan in full but fails to receive their original property documents within 30 working days, the concerned bank or financial institution will be liable to pay a compensation of ₹5,000 per day for the delay. This step is being widely appreciated as a bold effort to ensure transparency and accountability in lending practices.
RBI’s Directive in Detail
The central bank has clarified that once a borrower clears all dues, the lender must return all original property documents held as collateral within 30 working days. In cases where a legal charge has been registered on the property, it must be formally removed by the lender within the same time frame.
Failure to meet this deadline will make the borrower eligible to receive daily compensation of ₹5,000 from the bank or NBFC until the documents are returned.
Action Triggered by Public Complaints
RBI’s decision comes in response to a growing number of complaints from borrowers who reported that several banks were delaying the return of important documents even after loans were fully settled. In many cases, such delays led to legal disputes and personal distress, prompting the central bank to step in with a formal directive.
Mandatory Information Disclosure by Lenders
As per the new circular, banks must proactively inform customers — at the time of loan approval — about the branch or location from where they can collect their property documents upon full repayment. This clause aims to eliminate ambiguity and ensure smooth handover procedures.
Furthermore, once the loan is paid off, banks must directly notify the borrower about where and how to collect the documents.
Rules Apply to All Secured Loans
The RBI has made it clear that these regulations apply to all types of secured loans where assets such as real estate or other valuable property have been pledged. In the unfortunate event of a borrower’s death, the bank is obligated to hand over the documents to the borrower’s legal heirs.
Accountability in Case of Lost Documents
In situations where original documents are lost while in the bank’s custody, the onus lies with the bank to assist the customer in obtaining certified copies or duplicates. This includes bearing the cost and effort of replacing the documents in coordination with relevant authorities.
Industry Reaction and Broader Implications
The new RBI rules are being seen as a major win for consumer rights and a push towards fair banking practices. By enforcing strict timelines and imposing financial penalties for non-compliance, the RBI aims to reduce harassment faced by borrowers and improve the overall lending ecosystem.
This policy also marks a shift towards more borrower-centric regulations, placing a legal and moral responsibility on banks and NBFCs to act swiftly and transparently.