Cibil and Banks plans database to curb home loan frauds

To keep a check on the home loan frauds banks along with the Credit Information Bureau (India) or Cibil have plans to create a database of mortgaged properties.

Cibil, which collects borrower details from banks, has approached the Indian Banks Association (IBA) with a proposal to develop a repository for mortgages. Banks have shown interest in creating a mortgage database as cases of borrowers having availed of multiple loans against the same property have come to light.

With the creation of mortgage database banks would be able to determine whether a property has been already mortgaged when a borrower comes to them for a loan against it and this would help in checking the increasing instances of housing loan frauds.

Banks will be giving details of the mortgaged property to help Cibil create the repository, besides sharing the borrower profile. Details such as the location and address of properties will be collected.

A senior IBA official said besides this from a credit report on the borrower, banks will be able to match the property to see whether it had been mortgaged already.

At present, a bank can only check the ownership details of a property, but it is not possible for them to determine if a loan has already been taken against it. It is possible to take color photocopies which are very similar to the original.

Even in the case of under-construction properties frauds have been detected. These properties have been unoccupied when a bank visited these for inspection, the official said.

Cibil is the only operational credit bureau in the country with 143 members, which includes 77 banks. In 2004 the number of checks done by members has gone up to 90 million per annum from 4 million annually.

Arun Thukral, managing director, Cibil, said: "There are registered mortgages and equitable mortgages. The repository would hold information on all mortgages. We are talking to banks. It is too early to say what shape or when the product will be launched."