The guidelines could prescribe a minimum search period, key documents and records to be verified, as well as precautions to be followed while preparing title search or legal background check reports, said people familiar with the development.
“The RBI had sought suggestions from banks on this issue. We have, after an internal discussion, sent our inputs stating that the process and other related decisions should be left to individual banks,” a bank executive said on condition of anonymity, adding that the RBI may issue broad guidelines to devise the process for title search.
Queries emailed to the RBI did not elicit a response till press time.
A Supreme Court judgement last year said that the RBI and other stakeholders should collaborate in developing a standardised and practical approach for preparing title search reports before sanctioning loans and also for the purpose of determining the liability (including potential criminal action) of the official who approves the loan.
“We deem it necessary to observe that banks should remain very careful with inadequate title clearance reports, more particularly when such reports are obtained cheaply and, at times, for external reasons. This concerns the protection of public money and is in the larger public interest,” a bench of justices JB Pardiwala and R. Mahadevan said in a judgement in January 2025 in the Central Bank of India & Another versus Smt. Prabha Jain and Others case. The court further said that there should be standard guidelines for fees and costs associated with title search reports to ensure that they maintain high quality.
Another bank executive said that the RBI later sought suggestions from banks and that discussions have been on since April this year to frame broad guidelines. “At present most lenders make a search of the title of the property for not less than 30 years irrespective of the fact that a clear and marketable title is established by a shorter search of 13 years,” the executive said, adding that the mortgage check is attached with the loan proposal and remains in the safe custody of the bank.