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A consumer forum in Coimbatore ordered PNB Housing Finance to compensate a borrower family with INR 10 lakh and litigation costs after their original title deeds went missing post-loan repayment. The ruling also mandated document reconstruction via certified copies and cancellation of related deposit warrants. This action comes as part of a broader regulatory push that obliges lenders to return property papers within 30 days or face penalties of INR 5,000 per day. Historic rulings against banks like PNB affiliate UBI and ICICI underscore the growing scrutiny over handling of original property documents and deficiency in service.
A district consumer disputes redressal commission in Coimbatore recently held PNB Housing Finance Ltd accountable for losing the original property documents of a customer who had repaid his housing loan in full. The complainant had availed a home loan of INR 22.90 lakh, which was fully settled. A no-objection certificate was also issued by the company. However, when the borrower and his father approached the company to collect the original title deeds, they were informed that the documents were untraceable. Advertisement
The forum, chaired by president T Gunasekaran and members K Saravanan and N Sathya, directed the lender to pay a compensation of INR 10 lakh to the complainant for deficiency in service. Additionally, the company has been ordered to cancel the memorandum of deposit of title deeds, bear the cost of obtaining certified copies of all documents from the sub-registrar office, and assist the complainant in securing a non-traceable certificate from the local police station.
This order adds to a growing list of rulings where financial institutions have been penalised for similar lapses. In the past, the National Consumer Disputes Redressal Commission had imposed a penalty of INR 50.65 lakh on United Bank of India (now merged with PNB) for losing original documents in a case that dated back several decades. ICICI Bank was fined INR 25 lakh in another case where it had misplaced a borrower's documents after loan closure.
The Reserve Bank of India has also taken a firm stance on such issues. In its 2023 circular, the central bank mandated that all banks and non-banking financial companies must return original property documents within 30 days of loan closure. If delayed, they are liable to pay INR 5,000 per day of default. If documents are lost or damaged, lenders are required to help reconstruct them and bear the full cost.
Consumer forums in other parts of the country have also awarded compensations ranging between INR 25,000 and INR 10 lakh depending on the severity of the lapse. These rulings consistently note that even if certified copies are issued, they do not hold the same legal and financial value as the original title documents-especially during resale or mortgage.
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