Are you familiar with the majority of anomalies discovered during bank statement analysis?
In the pursuit of financial transparency, bank statements play a crucial role in revealing borrowers’ financial behaviour and assessing their ability to repay loans.
However, during the evaluation process, certain red flags often emerge, providing intriguing insights and uncovering potential frauds.
Let’s explore the common anomalies observed in the industry.
1) Unexpected large cash deposits, indicating undisclosed income or questionable activities.
2) Frequent delays in salary debits.
3) Infrequent bank deposits.
4) Multiple loan payment defaults.
5) Consistently maintaining a low cash balance.
6) Frequent bounced transactions, reflecting poor financial discipline.
7) Regular and significant use of overdraft facilities, indicating weak financial management.
8) Consistent negative cash flow, where expenses exceed income, leading to difficulties in meeting financial obligations.
9) Significant fluctuations in income without valid explanations, raising doubts about repayment capacity.
10) Spending patterns that exceed credit limits or involve inconsistent transaction locations, suggesting financial mismanagement or potential fraud.
11) Artificial transactions between related companies to inflate turnover.
12) Suspicious RTGS transactions or repeated transfers from the same account within a short period.
A bank statement analyzer acts like Sherlock Holmes, revealing clues to financial personas, good or bad. Lenders definitely should incorporate it into their loan origination process for spotting the above anomalies and make informed decisions when lending to their borrowers.
What other red flags have you come across?
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