Bank Dismissal and Housing Loan: Can Pending Fraud Charges Affect Document Release?

If an employee of a bank is dismissed under charges of fraud and a police case is registered, and the employee has a housing loan with the bank, they are asked to either convert it into a public rate provided they have the income to meet the EMI or settle the loan completely. The employee cleared the housing loan. Is the bank liable to release the documents and mortgage of the housing loan, or can the bank keep the documents and deny the release of property due to the pending FIR against the ex-employee?

The decision and action of the bank to terminate the services of the delinquent employee through a parallel departmental disciplinary process, and instructing the dismissed employee to either continue repayment of the housing loan granted during his employment at a higher interest rate applicable to the general public or settle the loan immediately, indicate that the relationship between them has now transformed into that of debtor and creditor only. Therefore, once the debtor has fully cleared the debt to the satisfaction of the creditor, the creditor cannot rightfully refuse to release the mortgaged property based on the existence of any pending criminal case against the debtor for service-related offenses.