The National Consumer Dispute Redressal Commission (NCDRC) has directed United Bank of India (UBI), now Punjab National Bank (PNB), to pay a penalty of Rs 50.65 lakh over losing a borrower’s property documents.
In 1983, one Ashok Kumar Garg, a former employee of UBI, took a home loan of Rs 67,690 from the bank’s Sufdarjang Development Area branch for the purchase of a property at New Delhi’s Tagore Nagar. Under the usual practice, the bank took the property papers at the time of sanctioning the loan.
As a standard practice, banks in India keep the original property documents at the time of sanctioning the loan. The borrower only gets to keep duplicate copies of the document. These documents are returned only after the loan is fully repaid. These documents are sent to the bank’s central repository, mostly run by a third party. Since central repositories are mostly run by third parties, their location may change during the housing loan tenure. Consequently, a great number of cases have come to light where banks have conceded to either misplacing the document or losing it.
After the loan was fully repaid, Garg has to write to the bank several times before he got a response from the bank in 2010 that his property papers were not traceable, and that UBI was rearranging for the certified copy after registration of the necessary first information report. Aggrieved by the delay and monetary loss caused by the bank’s negligence, Garg approached the national consumer panel.
See also: What to do if your property documents are lost?
“If anything, the suffering of the complainant would appear to be even more acute since he is very old man, who was aged 63 years when he filed the complaint seven years ago. Furthermore, he happens to be an employee of United Bank of India itself, and it is shocking that the Bank could have acted with such carelessness in keeping safe custody of the vital documents of their own employee to whom they had advanced the loan which was cleared within time,” the NCDRC Bench of justice Sudip Ahluwalia and J Rajendra said in its order. Of the total fine, Rs 50 lakh is towards financial damages, Rs 50,000 for mental agony & harassment and Rs 15,000 towards litigation cost.
Recall here that the Reserve Bank of India on September 13, 2023, issued a notification, saying banks must return property documents to a borrower and remove charges registered with any registry in 30 days after full settlement of a loan account. The apex bank has also provided for a penalty of Rs 5,000 per day, if a bank fails to return property documents to the borrower within the prescribed timeline.
See also: Return original property papers in 30 days of loan closure or pay penalty: RBI
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