Importance of attachments to loan application

This query is : Resolved

Pavan RN (Querist)
Follow

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)
Follow

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.