Finance Ministry Rebukes PSU Banks for Delay in Returning Property Papers after Loan Repayment

The Union Ministry of Finance has criticized public sector banks (PSBs) for delaying the return of property documents to borrowers who have fully repaid their loans. According to a finance ministry official, the government is not satisfied with how the banks are handling this matter.

When a customer repays a loan, banks are supposed to return the original property papers (used as collateral) without unnecessary delays. However, in many cases, this is not happening on time, leading to customer frustration and loss of trust.

Back in August 2024, there were around 29,500 such pending cases. While this number dropped to 20,800 by February 2025, the Ministry still sees it as a serious concern.

An official said this delay is a violation of customer trust and affects the public image of PSBs. To address this, the Ministry has asked all government banks to identify who is responsible for delays, set clear deadlines for returning documents, and speed up the process of releasing pledged properties after loans are repaid.

Among the banks, State Bank of India (SBI) has the highest number of pending cases at 18,000, followed by Bank of Baroda, which has around 1,000 such cases.

As per RBI guidelines, Banks shall release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan account.

The borrower shall be given the option of collecting the original movable / immovable property documents either from the banking outlet / branch where the loan account was serviced or any other office of the RE where the documents are available, as per her / his preference.

The timeline and place of return of original movable / immovable property documents will be mentioned in the loan sanction letters issued on or after the effective date.

In case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan, the banks shall communicate to the borrower reasons for such delay. In case where the delay is attributable to the banks, it shall compensate the borrower at the rate of ₹5,000/- for each day of delay.

In case of loss/damage to original movable / immovable property documents, either in part or in full, the banks shall assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents and shall bear the associated costs, in addition to paying compensation. However, in such cases, an additional time of 30 days will be available to the banks to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).