Everyone who runs a business needs a policy in place so as to avoid the infiltration of fraudulent practices and individuals who indulge in them. All those associated with a firm need to make sure that they do not get ensnared by something phoney as that will lead to complications and monetary losses.
How many of you have heard about FCUs (Fraud Control Units) or RCUs (Risk Control Units)? The terms are pretty self-explanatory but we will discuss some more so as to get to the heart of how they traditionally operate.
Most of these non-banking institutions need a fraud control unit in place before they receive loan applicants. The chief purpose of these FCUs (Fraud Control Units) is to monitor any suspicious transactions in the accounts of individuals whose loans require sanctioning. Some instances of discrepancies would be a student whose account gets credited with a sudden inflow of inexplicable cash.
Less than a year ago, some individuals in Bengaluru were arrested for scamming people through fake loan apps. Fraud can happen both ways, loan applicants misrepresenting financial documents or even fraudulent financial institutions scamming citizens. A couple of Chartered Accountants had specialized in setting up a Non- Banking Financial Company (NBFC) and many people gave up their lives as they were unable to repay the loans that they had taken from such loan apps. These incidents yet again showcase how important it is to conduct background screenings when it comes to financial-related queries.
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As a company that conducts extensive background checks, Millow physically verifies by conducting field investigations. Some of the people who apply for a loan need a lot of verification on the bank’s part so as to be in the clear. The different kinds of loans are infrastructure-related ones, education-based ones and small business ones. Suppose, an individual who receives a salary of 10 lakhs per annum were to ask an NBFC to sanction a loan for them. We verify their credit history, bank statements for all the previous months and CIBIL score. We then prepare a report and state details of any financial discrepancies that might need careful consideration.
Some examples of such discrepancies would be an evasion of taxes, untimely payments, withdrawal and influx of massive amounts of cash, not clearing one’s dues in terms of prior loans. We also check Form 16 to get insights into their Income Tax records. Once the history of the applicant gets generated, a call is then taken regarding the amount of loan that can be issued. This is mainly done to reduce the incidence of NPAs (non-performing assets). The greatest challenge for loan providers is debts and so they need to be absolutely certain that the loan applicant happens to be creditworthy.
The credit score in India fluctuates between 300-900. Lenders consider 750 to be the ideal score. The score is again dependent on factors such as timely payments, one’s loan history, credit balance and credit usage. It is quite arduous to maintain the credit scores of millions of individuals in our country. Accurate computation is next to impossible here. Financial institutions depend greatly on other third party sources to glean data on the applicants so that they are able to find out as much information as possible. The turnaround time for verification is usually 3-4 days and it is done on a pan-India basis by our agents posted in the different cities.
A survey conducted by Fraud.com brought to light that 52% of banks fail to monitor the total cost of fraud risk management.
Accountability and transparency are two key elements that FCUs are based upon. Detecting dubious activity at the very onset will then mitigate the risks associated with financial fraud and give a clearer picture of the bank’s risk appetite.
Fraudulent doings are costing financial institutions billions of dollars each year. FCUs need to be in place so that customer assets remain safe. A bank’s repute must not be put at stake just because a certain set of people have been negligent. It takes years to build one’s credibility but only seconds to get rid of it.
Millow is India's one of the most prominent background check companies. We leverage our proprietary technology & stringent processes and provide you BGV reports in the shortest amount of time. If you need to get your employees, vendors, business partners, loan applicants, or even yourself/profile verified, do reach out on:
Contact: 011 41219183