Equitable Mortgage Frauds in Indian Banks

equitable mortgage fraud

Loans have become more accessible these days as banks are facilitating equitable mortgage, wherein you can pledge your property documents with the bank and avail a loan. However, there are many bitter truths associated with equitable mortgage. It has a loophole that allows fraudsters to take multiple loans with the same property.

Equitable Mortgage Frauds

Instances abound where builders have pledged the entire property with banks to raise huge sums, only to disappear, leaving behind unfinished projects. Units in the project would have been sold to buyers, who take home loans for the same property. The banks of buyers are then unable to trace the loan taken by the builder with the first bank. As a result, buyers do not get the apartment registered in their name unless the builder clears his dues and the property is released from the first bank.

The banks that have offered loans to buyers are also left in the lurch as they are unable to get a hold on the property.

Drawbacks of equitable mortgage

Equitable mortgage is an easy method of obtaining a loan, but it has many loopholes that can be used to mislead banking institutions. The main disadvantage of equitable mortgage is that any charge created on the property due to equitable mortgage is not known to the public. This means, unlike a registered mortgage, there are no public records on equitable mortgages with bank or any other financial institution. This loophole is liable to be used to get loans on the same property from multiple banks.

Co-operative Bank in Money Laundering

cooperative bank money laundering

Cooperative banks have once again come under the scanner of the income-tax (I-T) department. While the department suspects a mega fixed deposit (FD) scam spread over several co-operative banks, there is another fraud through demand drafts worth less than Rs 50,000, which is the maximum that one can deal without producing PAN cards.
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Pre-disbursement Due Diligence

due diligence

Recent headlines around rising Non Performing Assets (NPAs) in India have brought a myriad of challenges faced by banks and financial institutions into the spotlight. Banking and finance sector is struggling with the constant issue of inadequate due diligence about the borrowers.
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