Can you trust banks with your sale deed, title deed?

Nowadays there are very few who do not avail of a loan to buy a house. And to get a loan, you have to submit a number of original documents, including your original title deeds with the banks. Interestingly, most often the owner of the house does not even get to see the original title deed until the time you decide to sell the house. In other words, your original documents are held by the bank, though you may be the owner of the house. But just how much can you trust your bank on this?

Not much, an instance cited in an RBI document shows.

Picture this: You buy a plot on a loan from a bank which you eventually repay fully. But even after several requests, the bank do not return your original documents. What will you do?

More from Investing

MSMEs are breaking the traditional convention. Look who’s funding them Scale-up your startup without an investor! Here’s how

[caption id=“attachment_1123105” align=“alignleft” width=“380”]  to get a loan, you have to submit a number of original documents, including your original title deeds with the banks. Reuters[/caption]

If you thoughtthis is an imaginary situation, it is not. The above example comes from the Reserve Bank of India’s banking ombudsman office. In this case, the aggrieved customer finally approached the banking ombudsman.The bank told her that the original sale deed of her property was not traceable, and it would create new documents at its own cost.“The loss of original deeds of the property by the bank was serious deficiency and that even after coming to know that the original documents were lost at their end, they had not taken necessary action on their own and instead waited for initiating the process, only after the complainant approached the BO after following up with the bank for three years,” the banking ombudsman observed settling the dispute. It also ordered the bank to pay a compensation of Rs 10, 000 to the complainant and hand over the re-created documents.

What we can learn from this: There are a number of reasons as to why a bank could lose your important documents, sale deed, title deed and the like. It could even be just carelessness or it can be natural calamities like flood. In 2005, floods in Mumbai had destroyed or damaged thousands of customers documents kept with banks. Same was repeated in Gujarat floods in 2006.At times, it could be due to an accident. On 23 July 2010, the Times of India reported of an incident where fire destroyed records stored at State Bank of India branch in Ludhiana. The sad part is you as a customer, can’t do much.

We suggest that you keep a set of photocopies of all the documents you submit to the bank with you as well. Ideally, get these photocopies attested as well. But as an additional step, we suggest you get all the original documents scanned and stored electronically.