Mortgage fraud is not just a financial irregularity—it’s a serious criminal offense that erodes trust in the banking system and distorts the real estate market. In Bangladesh, such frauds are prosecuted primarily under the Penal Code, 1860.
This article breaks down the key legal provisions commonly used in mortgage fraud cases, helping bankers, legal professionals, and exam candidates understand the practical framework.
🔍 1. General Fraud & Cheating (Core Charges)
At the heart of most mortgage fraud cases lies cheating and deception.
➤ Section 415 – Definition of Cheating
This section defines cheating as:
- Deceiving someone fraudulently or dishonestly
- Inducing them to deliver property
- Causing harm to body, mind, reputation, or property
👉 In practice:
Mortgage fraud often involves:
- False income statements
- Fake ownership claims
- Misleading loan applications
➤ Section 420 – Cheating and Dishonestly Inducing Delivery of Property
This is the most commonly applied section in banking fraud cases.
- Punishment:
- Imprisonment up to 7 years
- Plus fine
💡 Example:
A borrower submits forged documents to obtain a home loan—this directly triggers Section 420.
🏠 2. Fraudulent Dealings with Property (Sections 421–424)
These sections address dishonest property transactions, which are central to mortgage fraud.
➤ Section 421
Dishonest concealment or removal of property to avoid creditor claims.
- Punishment: Up to 2 years imprisonment, or fine, or both
➤ Section 422
Fraudulently preventing debts from being recovered
➤ Section 423
Execution of property transfer with false consideration statements
➤ Section 424
General concealment or removal of property with fraudulent intent
💡 Banking Insight:
These sections apply when a borrower:
- Hides mortgaged assets
- Secretly sells pledged property
- Manipulates ownership records
🖋️ 3. Forgery & Fake Documentation (Sections 463–471)
Forgery is a key component in many mortgage fraud cases, especially where documentation is manipulated.
➤ Section 463 – Definition of Forgery
Creating false documents or electronic records with intent to cause harm
➤ Section 465 – Punishment for Forgery
- Imprisonment up to 2 years, or fine, or both
➤ Section 468 – Forgery for Cheating
If forgery is committed to cheat:
- Imprisonment up to 7 years + fine
💡 Common Examples:
- Fake land title deeds
- Altered valuation reports
- Fabricated salary certificates
⚖️ 4. Additional Relevant Sections
Depending on how the fraud is executed, additional provisions may apply:
➤ Section 406 – Criminal Breach of Trust
Applies when entrusted property is misused
💡 Example: Loan funds meant for property purchase are diverted
➤ Section 477A – Falsification of Accounts
Targets manipulation of financial records
💡 Example: Altering financial statements to justify loan eligibility
🧠 Practical Takeaways for Bankers
-
✅ Ensure strict due diligence
Verify ownership, income, and valuation independently -
📄 Authenticate documents
Cross-check originals with issuing authorities -
🚩 Watch for red flags
- Multiple loans
- Inconsistent financials
- Urgent/rushed transactions
-
⚖️ Strengthen legal awareness
Helps in timely action and risk mitigation
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