RBI and title verification
A loan on a defective title is not just a bad loan. It is a compliance problem now too.
Regulators have been tightening what a lender must check before it advances against property. The scrutiny is no longer just prudence; it is expected.
What the regulator wants
The direction has been toward standardized pre-lending due diligence: a proper title search, a documented encumbrance check, and a clear trail behind the sanction. A loan advanced on a sloppy or undocumented check is the kind of thing an inspection calls out.
Why it became a compliance issue
When a loan turns into an NPA because the collateral was defective, the question is not only whether the borrower defaulted but whether the lender verified the security. The scrutiny report becomes part of the answer to that question.
The practical consequence
A lender needs a report that is documented and defensible. That means a trail from every finding to a source, and a format the lender’s own system accepts. A report that cannot show its work is the risk, not the property.
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