Type of Frauds

Fabrication of Income Documents like Income-tax Return / Salary Slip / Balance Sheet etc.

Severity of fraud

LOW

Modus Operandi

Committed generally by borrowers in connivance with Direct Selling Agent / Estate Agent / Builders

Mitigating factors / Suggestions for Preventive cures

1. Verification of salary slips with employer
2. Income Tax Department should upload on their website the list of Income Tax payers and defaulters.
3. Salary amount should be compared with Bank Statement.
4. Cross verification of balance sheet.
5. Personal interview of the borrower plays very important role.

Type of frauds

Loan amount disbursed by way of cheque / Demand drafts are encashed by third party / agents etc.

Severity of fraud

MEDIUM

Modus Operandi

Disbursed amount cheques are collected by the Agents / third parties from the borrower's bank and deposited in fictitious account opened for this purpose and amounts are withdrawn from such bogus account.

Mitigating factors / Suggestions for preventive cures

1. Cheques should be issued in the name of bankers to the Builders with the bank account number on it.
2. Cheque should not be handed over to the borrower / agent / seller. Bank's Marketing Officials can be sent for delivery of cheque to the builders / sellers of property at the registered address mentioned in the title deeds.

Type of fraud

Title documents being forged - Stamped documents forged by Borrower customer / Builder

Severity of fraud

HIGH

Modus Operandi

Coloured Xerox copy of various documents are produced including encumbrance certificate, fake stamp papers etc. which are difficult to identify / distinguish from the original one.

Mitigating factors / suggestions for preventive cures

1. Tracking and sharing of all information among the Banks & Housing Finance Companies about names of blacklisted builders & developers.
2. Agreement for sale /document of title should be in DEMAT form.
3. In case of large value loans. bank can approach the Sub-Registrar's Office to verify the genuineness of the stamp paper / documents / registration receipts, etc.

Type of Frauds

Over valuation of the property

Severity of fraud

MEDIUM

Modus Operandi

These frauds are committed to draw higher loan amount by the borrower in connivance with the Builders/ valuers. The value of the property are inflated by including various expenditure and additional amenities, fixtures, legal charges, society advance, maintenance charges, etc. which are non-existing.

Mitigating Factors / Suggestions for preventive cures

1. For valuation over Rs. 25 lacs, valuation should be done by two independent valuers.
2. Govt. should introduce certification course for the approved valuers.
3. Banks should develop in house expertise for valuation of properties.

Type of Frauds

Multiple financing

Severity of fraud

HIGH

Modus Operandi

These frauds are extension of the fake documents that are produced to different banks / Housing Finance Agencies

Mitigating Factors / Suggestions for preventive cures

1. Tracking & sharing of information among the Banks & HFCs about names of black listed Builders & developers selling same properties to more than one buyer.
2. Agreement for sale / document of title should be in DEMAT form.
3. Bank / Housing Finance Agencies should insist on the original title deeds of the landed property on which structure is built.

Type of Frauds

1. Cancellation of booking of flats / property i.e. collusion between customer and builder.

Severity of fraud

MEDIUM

Modus Operandi

In this case after availing the initial loan amount, the booking is cancelled and the borrower directly take the refund from the builders.

Mitigating Factors / Suggestions for Preventive cures

Registration receipt issued by Registrar of stamps office should bear hypothecation Clause as in case of certificate of Registration has in case of Auto Loan.

Type of Frauds

Sale of property by loanee without clearing existing loan

Severity of fraud

MEDIUM

Modus Operandi

Property is sold through duplicate / fake title deeds even though the legal title is with the bank / Housing Finance Agencies.

Mitigating Factors / Suggestions for Preventive cures

1. Equitable Mortgage should be created at Registrar's office by deposit of title deeds. For this purpose all banks should represent to Central & State Government through I.B.A & R.B.I for enactment of necessary provisions.
2. Internal due diligence plays important role to prevent this type of frauds.

Type of Frauds

Mis-representation of end use of loan

Severity of fraud

LOW

Modus Operandi

Loan taken for Residential Housing Property. However, Commercial property is purchased by availing such loan.

Mitigating Factors / Suggestions for Preventive cures

In order to ensure end use of loan, bank should depute Officer for inspection / verification of property, whether it is Residential Housing Property or Commercial Property.

Type of Frauds

Sale of property by builder without clearing / repaying Construction Funding Loan availed by them from banks / Housing Finance Companies.

Severity of Fraud

MEDIUM

Modus Operandi

Builders / property developers after taking Construction loan from banks / Housing Finance Agencies are selling developed ready flats / Galas / developed plots, etc. without knowledge of their financiers & without repaying construction Funding loan to them.

Mitigating Factors / Suggestions for Preventive cures

1. This aspect of construction Funding Loan whether availed by the developer / builder or not, should be verified at Project clearance level by Banks/Housing Finance Companies.
2. Original documents should be called for verifications at the time of appraisals of any Housing Loans.