Home Loan Borrowers, Be Ready For Stricter Verification

A recent report by proxy advisory company Institutional Investor Advisory Services shares insights that are worth noting.

Sample this.

The domestic banking sector, says the firm, reported a total of 12,553 fraud cases worth Rs 18,170 crore in financial year 2016-17. The biggest hit was taken by Bank of Maharashtra, which registered the highest number of such cases (3,893). Following close was private lender ICICI Bank, with 3,359 cases. Third in the list is HDFC Bank which reported 2,319 cases of fraud.

However, it was Punjab National Bank (PNB) that reported the highest loss in terms of money. The bank lost Rs 2,810 crore last financial year. Bank of India lost Rs 2,770 in fraud while State Bank of India took a hit of Rs 2,420 crore.  

Lenders that have been able to control fraud, according to the report, include IDFC Bank, Dhanlaxmi Bank and DCB Bank.

Noting that the average fraud size in country's banking sector is high, IiAS said there is an urgent need to revisit and strengthen internal financial controls for these financial institutions.

"The inability to contain frauds has financial implications. For example, in Bank of Maharashtra, the fraud amount as a percentage of total assets was 1.02 per cent… Added to a gross non-performing asset of about 19 per cent, this means that more than one-fifth of the asset size is at risk every year due to weak controls and lack of adequate due diligence," it added.

From here on, borrowers looking for big money from financial institutions would definitely have to go through strict verification process. However, the gravity of the matter will also have serious impact on borrowers of home loan products. In case you are planning to apply for a home loan, be ready for a more rigorous verification process.  

Here are certain tips that would improve your chances of getting a quick loan nevertheless.

*Apply with the bank where you already have an account.

*Cheque bounces are serious financial offence. Make sure your account does not reflect any such offence. In short, make sure there are no cheque bounces.

*Maintain a good credit score.

*Be ready with all the documents.

*While banks do finance 80 per cent of the property cost, they would be more willing to grant you a loan if your share in the purchase is higher.

With inputs from Housing News