You can get financing for anything – medical expenses, marriage, child’s education, buying car and house, etc. And personal loan is the most ideal choice of borrowers. There are many lenders out there in the market to attract potential customers with various offers for loan. And any individual whether salaried, self-employed, businessmen, and others can get loan.

However income proof of the borrower is the most important document required by the lender before approval. Borrower’s monthly/annual income plays a key role in evaluation of credit worthiness. And for the lenders to verify the income stated by the salaried or self-employed individual while filling up the application form are monthly salary slip, IT return, Form-16 or bank statement and few others are the only documents.

Check out: 8 documents to prove your income

However many employers in India still offer salary in cash. So for such employees, getting a personal loan becomes extremely difficult. This is because, lenders have no way to verify the source of income. In some companies or freelancing jobs, individuals are not given salary slip, which again creates problems when applying for a loan.

And it is very common scenario that borrowers generate fake salary slip for personal loan and other documents such as bank statement, IT return, form 16, duplicate PAN card etc. to get a loan. This also applies to individuals who are earning low salary as well. Applicants use software to generate fake pay slip for personal loan easily. But forging the documents is an invitation to the unforeseen risks.

The main reasons of producing fraudulent salary slip for personal loan are:

1. Get higher loan amount
2. Increase the chances of loan approval
3. Reduced interest rate
4. Hiding the fact that salary is given in cash or cheque

How People Fake?

As an example – An individual may resort to using Google to create a false salary slip when their income falls short of the loan amount they need. For instance, if someone with a monthly salary of INR 20,000 needs a personal loan of INR 8,00,000, but the minimum monthly income requirement for the loan is INR 30,000, they may choose to generate a fraudulent salary slip in order to bypass the process.

Additional reading: Personal loan for low salaried person.

And borrowers are not aware of the implications of providing forged documents for getting any type of financing including personal loan. And most importantly they are unknown of intelligence used by the banks to identify genuine loan applications.

Here are the implications of fake salary slip for personal loan:

Legal prosecution: If someone manages to fake pay slip and get loan, then lender has complete authority to take legal route if this is cross verified. And if this happens, individual’s future will be at risk. And probability is extremely high that no employer will offer job in the future. If forging the documents go unnoticed at the time of application verification and someone managed to procure loan but later that person fails to repay loan then lenders can take legal route and confiscate bank account or other property and criminal proceedings will follow. The borrower may even end up in the prison and the whole life will become miserable.

Lose employer’s trust: If the lender verifies applicant’s income from his/her employer then it can put the trust at stake and may also result in job loss. And getting a new one will become difficult, as you may not get experience letter or relieving letter from the existing employer which is essential when applying for a new job.

Credit score downgrade: Such frauds will straightaway result in downgrading of credit rating.

No bank loan in the future: Because of credit score downgrade, no lender will offer financing or credit card in the future.

Immigration problem: If criminal case is filed because of producing fake salary slip for personal loan then moving out of country will become impossible. Most countries ask and verify criminal case on the visa applicant’s name. If you do not have passport, then getting the same will be problem.

PAN card blacklisted: Most importantly, PAN card may get blacklisted for the life. And getting a new one will be impossible.

Is it easy to fake?

Prior to granting approval for personal and retail loans, banks get a CIBIL report to detect any discrepancies made by the borrower. Additionally, banks request clearance from other financial institutions and IT returns for the purpose of verification. As a result, it is highly improbable to evade scrutiny through cross verification by banks. Also, in today’s times, tracking systems are highly accurate. It is not possible to avoid being tracked, as these types of individuals can be easily identified during document verification.

Remember that faking anything in today’s world is illegal and one mistake can ruin the life.

Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at nikeshmehta@allonmoney.com.