Technology has made it very easy for phony applicants to provide fake documents for loan applications, thus the need for Banks to engage external agencies with forensic skills (like field investigation agencies, risk containment units or detective agencies)
for verification of the papers has become necessary. Bankers say that engaging these agencies are not in violation of any norms laid down by RBI (Reserve Bank of India) as the final decision rests with the bank.
The outsourcing helps their in-house validation process (including internal credit scoring, credit bureau inputs, internal negative databases and customer-level visits to screen credit card applications). All applications are then screened by specialist risk containment teams.
Step by step process followed by banks
- Receiving application
- Pass data to field investigative agency (where they carry out basic address, job and individual verification)
- Banks assess different documents and pass them to their risk containment unit to check their authenticity
- Final call to pass the loan or not
Although banks have access to Credit Information Bureau (India) database (i.e., Cibil database) it is limited to existing borrowers only, whereas field investigative agencies have been in this business for long so have much more to offer. Their professional expertise helps banks differentiate between genuine customers and fraudsters at the stage of data verification itself.
Kind of frauds uncovered
- Salary slips, for instance, can be manually or digitally altered to create a favorable impression of the applicant
- Fake PAN cards — the name may be genuine, but another individual’s photograph is used.
- Presenting ‘proofs’ of non-existent residences or businesses
- Incorrect details — like wrong contact details, improper qualification, salary figures and work experience
- Fake salary slips, Form 16 statements, bank statements and so on.
In comparison with global credit bureaus, in India, Cibil — the only functional credit bureau currently — is still at a growing stage, so banks have to depend on detective agencies. These agencies are usually managed by professionals like independent chartered accountants who are adept in spotting fake documents. They do personal verification by visiting applicant’s home, workplace, talking to neighbors, colleagues, guards etc.
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