Importance of attachments to loan application

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Pavan RN (Querist)
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02 July 2012 During statu audit of bank i realised that bank neglect to check the aunthenticity of attachments...exm. Renewal of shop act, cross verification of itr filed simultaneously & financial statements , valid proof existance of busi....which may cause fraud ... When i questione same... They answered ..if repayment is smooth...then this is needless...is it right.?

Subramanian natarajan

Subramanian natarajan (Expert)
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03 July 2012 Banks generally prescribe the conditions of their sanctioning of loans in their file. It is called as a sanction letter. It is basic for any bank to verify the existence of a shop before sanctioning the loan. It is common sense that in case of illegally occupying a shop, the borrower may land in trouble at any time. With the non existence of a legal shop, what can a bank do? You could have given your observations to the bank or contain it in your audit report for suitable authorities to
take necessary action.

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