Reserve Bank of India told banks to do legal audit and re-verification of title deeds of loans above Rs 5 crore to check fraud.
Two years back, banks were told to put a system a place wherein the concurrent auditors were required to look into the genuineness of the title documents especially for large value loans. This move was prompted by an RBI study of large value frauds, especially in the housing loansegment.
RBI has reviewed the norm and decided to introduce legal audits in such cases as part of regular audit exercise till the loan stands fully repaid.
It said that banks should independently verify the property valuation certificate, legal certificate submitted by the borrower
It has also directed banks to furnish review notes to their respectibe boards or audit committee of the board at quarterly intervals.
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