HomeNewsBusinessStandard Chartered Bank penalised by NCDRC for losing borrowerâs original document
It is the latest in a series of such instances, with the lenders being asked to pay compensation, limited though it may be.
Harsh Kumar
February 20, 2024 / 17:46 IST
Standard chartered bank
The National Consumer Disputes Redressal Commission (NCDRC) has penalised Standard Chartered Bank for misplacing a customerâs original registered sale deed. It directed the lender to pay Rs 50,000 as compensation, Rs 5,000 litigation costs and Rs 5,000 towards mental agony caused.
The NCDRC order dated January 31 said, "The opposite party (bank) is directed to issue a certificate in favour of the Complainant regarding loss/misplacement of original sale, deed document No. BDR/3/8895/2001. dtd.01/12/2001 executed & registered before the Sub-Registrar Kurla on 07/12/2001 and which was kept with Opposite Party for the security of house loan of Flat No.B-3/301 Lok Nisarg CHS, G.P. Read, Vaishali Nagar, Mulund (W), Mumbai ."
"The Opposite Party (Bank) is directed to comply with the aforesaid within one month from the date of service of this order, " the order added.
What was the case?
Pradeep Anand Shetty ofÂMumbaiÂhad taken a home loan fromÂa local branchÂof Standard Chartered Bank, for which he surrendered the original sale deed. However, when wanted to dispose of the flat he bought using the loan, he discovered that the bank had misplaced the document and he was not able to upgrade his housing, as was his intention.
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This was not the only instance where a bank lost original documents. In September 2023, NCDRC reprimanded ICICI Bank for not keeping a borrowerâs original documents safe and trying to shift the liability to a courier company. NCDRC directed ICICI Bank on that occasion to pay Rs 25 lakh as compensation and Rs 50,000 litigation costs.
In February 2023 it was IDBI Bank that came under the scanner, when NCDRC asked it to pay Rs 20 lakh compensation, Rs1 lakh towards mental agony and harassment and Rs 50, 000 as litigation expenses. Gurugram-based Binod and Sushma Dokania had filed the case against IDBI Bank alleging deficiency in service in losing or destroying original title documents of their flat mortgaged for securing a home loan from the bank.
RBI rules on keeping borrowers' documents
The Reserve Bank of India (RBI) on September 13 released revised norms under which lenders have to release original property documents to borrowers within 30 days of full repayment of a loan. Failing to do so will attract a penalty of Rs 5,000 per day to be paid to the borrower, the RBI said.
The norms are applicable to regulated entities (REs), a category that encompasses banks and non-banking financial companies (NBFCs), including housing finance companies (HFCs), asset reconstruction companies (ARCs), local area banks (LABs) and cooperative banks.
Earlier, the BP Kanungo committee set up by the RBI had proposed that banks and other lenders that provide home loans should compensate borrowers and pay a monetary fine if they lose the borrowers' property documents.
Typically, banks and lenders request original property documents and retain possession of them until the loans are fully repaid.
These recommendations were included in a committee report released on June 5, 2023, which outlined various suggestions for enhancing customer service standards in regulated entities.
"Holding these documents in their original form also reduces the risk of potential disputes or fraud in the future," the central bank had said.
Experts said that in the past, there have been cases where lenders have lost borrowersâ original documents, due to which they have had to face financial and other difficulties.
"There have been cases where documents were damaged or lost due to floods or other reasons. This puts the burden on the borrowers as they have to run around to get the documents," said Saurabh Bhalerao, associate director, Care Ratings.
Sunil Tyagi of Zeus Law, a corporate commercial law firm, one of whose areas of specialisation is real estate transactional and litigation work, is of the view that in case a customer is informed by the bank that the original title document deposited by the customer with the bank has been lost, he or she should obtain an acknowledgement in writing to the effect from the bank concerned. The customer should also insist that the bank file a complaint with the police regarding the loss of original title documents and provide a copy of the same.
If the bank does not give such an acknowledgment in writing, the customer should register a written complaint with the bank clearly mentioning the details of the documents submitted by him or her with the bank along with the details of original documents that the bank has lost and an acknowledgment of the same from the bank.
Harsh Kumar â is Correspondent at Moneycontrol based in Delhi. Harsh covers BFSI sector. You can reach him at Harsh.kumar@nw18.com
Tags: #National Consumer Disputes Redressal Commission (NCDRC) #Standard Chartered Bank
first published: Feb 20, 2024 02:24 pm
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