Economy

CVC alerts banks to fake CA certificates from borrowers

K Ram Kumar Mumbai | Updated on January 22, 2018 Published on December 18, 2015

shutterstock

Firms submit bogus papers to get loans approved



The Central Vigilance Commission has asked public sector banks to put in place a system to check the rising instances of fake Chartered Accountant certificates being submitted by borrowers to get loans.

While studying banks’ lending process, the Commission stumbled on instances of loans being given on the basis of bogus CA certificates. Such loans eventually turned bad.

To tackle this menace, the Commission has suggested that the banks check with the Chartered Accountants whether they have actually certified the borrowers’ balance sheets and profit & loss accounts.

Further, it has recommended that the Institute of Chartered Accountants of India make available an online directory of its members to banks. This will help bankers to easily get in touch with the CAs to confirm the genuineness of the certificates presented at the pre-loan sanction stage, said a senior public sector bank official familiar with the development.

A banker said on condition of anonymity that there have been cases of borrowers submitting balance sheet and profit & loss statements which have either not been certified by the CA or signed by a non-existing CA.

, “The bankers need to communicate with the chartered accountants concerned whether they have issued the certificate or not,” said S Ravi, a practising Chartered Accountant. “Letterheads can be easily forged and it would not be appropriate to blame the chartered accountants for such fake certificates. If any chartered accountant has issued a misleading certificate, bankers do have a redress mechanism with the ICAI.”

While in the case of big listed entities, all financial information is available in the public domain that bankers can cross-check with before sanctioning a loan, it is in the case of small companies that people try to misuse CAs’ letterheads, said another accountant.

If actual verification of the certificates happens, this fraud could be stopped to a great extent, he added.

The Reserve Bank of India unveiled a framework for dealing with loan frauds in May, given the incidence of frauds, in general, and in loan portfolios, in particular.

Published on December 18, 2015

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.