Reserve Bank of India

The Reserve Bank of India (RBI) has asked banks to take precautions in nine key areas to reduce the incidence of fraud in housing finance. The two main areas of fraud concern title document forgeries and multiple financing. Banks have been urged to share information with each other about blacklisted builders and developers who sell properties to more than one buyer.

Another area, which has been categorised as high-risk, is forgery of title documents with stamped papers forged by the borrower-customer or the builder. Here banks should track and share all information about names of blacklisted builders and developers. Further, in the case of large-value loans, banks can approach the sub-registrar's office to verify the genuineness of the stamp paper/documents/registration receipts, etc.

Another problem is the incidence of over-valuation of a property whereby higher loan amount is drawn by the borrower in concert with the builders or the valuers. This value is inflated by including various expenses and additional amenities, fixtures, legal charges, society advances, etc., which do not exist.

The Telegraph (Calcutta)

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