The Case of the Missing Mortgagor*



Case Code : CLMISC011
Publication date : 2010
Subject : Miscellaneous
Industry : Banking
Length : 03 Pages
Price : Rs. 100

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Key words:

Mortgage, Credit, credit limit, letter of credit, bank guarantee, legal opinion, funds flow analysis, clean drawings, irregular drawings statement


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The case is meant for discussing the topic of Mortgages in the course on Credit Management. It details the predicament in which the bank manager and other officials of a mid-sized bank find themselves after the bank was duped by some unscrupulous elements.


(i) Procedures to be followed while obtaining Legal opinion.
(ii) Significance of obtaining Non Encumbrance Certificate.
(iii) Understanding the different types of mortgages and the relevant safeguards.
(iv) Precautions to be taken while accepting Immovable property as security.
(v) Importance of search to be made in the books of Registrar’s Office (vi) Significance of pre-sanction inspection of property and residence of parties to the advance.


The mood in the conference hall of the Kailashpur branch of Swastik Bank was somber.

The bank had been duped by some unscrupulous businessmen. Now Raju Rastogi (Rastogi), the young and energetic Branch Manager, and the other bank officials involved in the matter were trying to dissect the situation and understand where they had gone wrong and how such a situation could be prevented in future...

Questions for Discussion:

1. List out the lapses on the part of the branch functionaries of the Heaven’s Cross Road and Kailashpur branches.
2. What were the guiding safeguards which the Branch Manager and Field Officer failed to follow?
3. What are the responsibilities of the Advocate who furnishes the legal opinion and what safeguards / stipulations should the bank follow while obtaining a legal opinion from branch advocates?

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