Same property was allegedly used to secure two loans with a forged NOC. The default exposed weak checks and the risks of oversize borrowing.
In Pune, a borrower took a ₹5 crore loan against a property from a bank, then allegedly used the same asset to raise another loan from a cooperative bank using a forged no objection certificate. When repayments stopped, the fraud came to light and total exposure crossed ₹11 crore. The episode highlights how outsized loans, forged documents, and weak verification can spiral into defaults and blacklisting.
Why and how it happened
The borrower first mortgaged a property to secure a ₹5 crore loan. Without obtaining a valid NOC from the first bank, the same property was pledged again to a cooperative bank.
Investigators found the second loan was enabled by a forged NOC. The borrower reportedly filed a false “lost documents” complaint to obtain duplicate property papers, which were then used to mislead the second lender.
Gaps in due diligence likely contributed. A robust title check, independent verification of the NOC with the issuing bank, and a charge search on the CERSAI portal could have flagged the existing lien.
Once the borrower stopped servicing debt, both lenders discovered overlapping claims on the same collateral.
For the borrower: credit score damage, likely blacklisting by lenders, potential legal action for forgery and cheating, and difficulty accessing future credit.
For lenders: recovery challenges, higher verification costs, and renewed focus on checking central registries and document authenticity.
For consumers and small lenders: a warning that double pledging and forged paperwork can go undetected until default, causing heavy losses.
A no objection certificate is required from the existing lender before the same property can be used for another loan.
Lenders are expected to register security interests on the CERSAI portal, which helps prevent double pledging of assets.
Defaults are reported to credit bureaus such as TransUnion CIBIL, Experian, Equifax, and CRIF High Mark, which can significantly lower a borrower’s score and limit access to future loans.
Four money lessons from the Pune loan fraud
| Lesson | What it means | Practical tip |
|---|---|---|
| Keep loan size manageable | Oversize loans invite rollover risks and debt traps | Keep total EMIs within 30–40% of take-home pay and hold a 6-month emergency fund |
| Never use fraud to borrow | Forged documents lead to blacklisting and legal trouble | If you cannot repay, negotiate with the lender instead of taking new debt |
| Verify collateral authenticity | Duplicate or manipulated documents can mask prior liens | Cross-check title with a lawyer, verify NOC with the issuing bank, and search CERSAI |
| Practice financial discipline | Spending before saving leads to chronic shortfalls | Pay yourself first, automate savings, and borrow only what you can repay comfortably |
How to verify collateral and avoid loan traps
Size the loan right
- Keep total EMIs within 30–40% of net monthly income.
- Stress test for a 2–3% rate rise and 3–6 months of income disruption.
Verify the property and title
- Obtain a lawyer’s title search and the encumbrance certificate from the sub-registrar.
- Check CERSAI for existing charges.
- Match names, survey numbers, and boundaries across all documents and tax receipts.
Validate the NOC and documents
- Call the issuing bank on official numbers to confirm NOC details.
- Beware of “lost originals” claims. Ask for FIR copy and public notice proof, then recheck with the original lender.
If lending to someone you know
- Hold originals in safe custody and sign a clear loan agreement.
- Where possible, register the charge or take a registered memorandum of deposit of title deeds.
- Inspect the property physically and check for tenants or disputes.
Monitor and act early
- Check your credit report quarterly for new loans or inquiries.
- If stress builds, talk to the lender about restructuring. Avoid taking a new unsecured loan to service an old one.
The Pune case is a reminder that large, complex loans amplify risk when documentation and verification are weak. Expect tighter checks by lenders and a push to verify charges through central registries. For individuals, the safest path is to borrow within means, verify every document directly with the source, and treat any NOC or duplicate deed with healthy skepticism.
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