Pranab Sets Aside Rs 25 Cr To Restrain Home Loan Frauds

March 2nd, 2010 
 
ET
 
Fraudsters would soon find it difficult to raise multiple loans

against the same property with the 

budget setting aside Rs 25 crore for a Central Electronic Registry.

The Central Electronic Registry (CER) would be a database

of all all mortgages and the banks that have a charge. 

So in future when a borrower seeks to avail a loan against Property,

an apartment or a house, the lender will be able to verify 

whether anyone has already got a charge on the property.

Today a majority of home loan frauds are in cases where 

borrowers raise multiple loans using forged documents.

In some cases the fraud is perpetuated by the developer 

who sells an apartment under construction to two different

buyers.

Earlier this month ET had reported that the

government may announce plans to set up such a registry 

to mitigate home loan frauds.

All banks and housing finance companies will 

provide data on title deed and home loans borrower

to the central registry. 

Next time, a bank processes

a home loan proposal, it will first verify with the central registry

if the title deed is clear and not registered in any other entity’s name,

or if any other bank has taken it as a security.

It is estimated that the banking sector has reported 

over to Rs 400-crore home loan frauds. 

These issues could be well tackled once a 

registry is formed. 

As of now, the Securitisation and Reconstruction of Financial Assets

and Enforcement of Security Interests (SARFAESI)

Act in India has enabled provision to set up a central registry.

Thus, the government will have to issue a notification which 

will be the first step to the formation of the registry.

However, the budget has not given more information 

about other stake holders in the registry. 

IBA has already submitted a feasibility report on the matter.