Skip to content
Email: contactus@precisa.in
Phone number: +91 98450 76647
  • Solutions
    • DSA Service
    • Forensic Investigation
    • Bank Statement Analysis
    • GSTR Analysis
    • Credit Report Analysis
    • Account Aggregator Integration
    • Anti-Money Laundering (AML) Analysis
  • APIs
  • Clients
  • About
  • Blog
  • Pricing
  • Sign In
Try Now
Bank Statement Analysis

Bank Statements for Loan Approval: Decoding the Complete Verification Process

September 8, 2023 precisateam No comments yet
Decoding the verification process

In India, personal loans are often the linchpin that supports numerous aspirations, be it a dream wedding or a much-needed home renovation. Being unsecured in nature, these loans demand a coherent verification process. However, the traditional method of manual analysis is laborious, error-prone, and time-consuming.

While documentation requirements vary across institutions, one universal constant is the bank account statement. Lenders closely examine bank statements from many months or even years to understand a borrower’s savings, spending habits, and financial responsibilities.

The objective?

To determine the creditworthiness and the associated risks of granting a loan. In this article, we’ll demystify the intricate process of how lenders decode bank statements for loan approval.

In this blog post, we explore a detailed breakdown of the loan approval process.

Step-by-step Process of Verifying Bank Statements for Loan Approval

verifying bank statement for loan approval

The entire verification process for bank statements for loan approval is designed to safeguard both parties—lenders and borrowers. It might seem a bit lengthy. But, it makes sure loans go to trustworthy and able borrowers. Let’s take a detailed look at the entire process.

1. Receiving the Loan Application

The journey begins with the bank receiving a loan application. An interested borrower can either physically visit the bank or initiate this process online, depending on the bank’s provisions.

2. Document Collection

The next step invariably involves the applicant submitting essential documents. This usually includes:

  • Address proof
  • Identity proof
  • Income documents
  • Completed loan application form
  • Some passport-sized photographs

The applicants also need to provide their bank statements for loan approval. Lenders may request statements ranging from the last six months to several years. The applicant should submit statements from all main accounts for a complete analysis.

3. Document Verification

Once the documents are collected, they’re sent to the bank’s verification department. The bank/lenders usually take about 1 to 2 days to process. A representative might physically visit the borrower’s residence and workplace to validate the provided details.

Simultaneously, electronic verification of identity documents like PAN cards and Aadhaar is executed via online platforms.

4. Analysis of the Bank Statement for Loan Approval

The bank reviews these statements to learn about the applicant’s financial habits, steady income, and any warning signs. Many automated tools often help with this, giving fast and clear information.

Here’s a detailed process of how lenders usually analyse the bank statement for loan approval:

  • Analysis of Income Streams: The primary concern for any lender is the borrower’s ability to repay. By assessing regular income inflows, be it from salaries, business income, or other sources, lenders gauge an applicant’s repayment capacity.
  • Evaluation of Expenditure: By reviewing regular payments, monthly bills, and other costs, lenders can understand an applicant’s spending habits. It also gives insight into any existing financial commitments.
  • Examination of Overdrafts and NSF Fees: Frequent overdrafts or Non-Sufficient Funds (NSF) fees are red flags. They indicate poor financial management and might stop lenders from giving a loan.
  • Scrutiny of Large and Unusual Transactions: Any large or irregular deposits and withdrawals will be examined closely. Lenders search for steady financial habits. These transactions can show hidden debts or income.
  • Monitoring Consistency with Application Data: Details provided in the loan application are cross-checked with the bank statement for loan approval. Discrepancies, if any, can affect the loan decision.

5. Calculation of Debt-to-Income Ratio

By comparing monthly debt obligations to monthly income, lenders compute the Debt-to-Income (DTI) ratio. A lower DTI is preferred as it indicates lesser financial stress on the borrower.

6. Verification Report Generation

Using the data gathered through verification, they craft a detailed report that captures their discoveries. It includes insights into:

  • Applicant’s financial history
  • Their financial stability
  • Potential risks

The loan officer will then closely examine the report to decide whether to approve or reject the application.

7. Decisioning

If the verification proves satisfactory, the process moves forward. However, if discrepancies are found, or certain criteria are not met, the application might get rejected. The bank ensures that the reasons for rejection are clearly communicated to the borrower.

Innovative tools like Precisa, with their real-time bank statement analysis, offer a 360-degree view of the applicant’s financial health.

8. Sanctioning of Personal Loan

This is the final stretch. Once the loan officer gets a green signal from the verification team, the loan agreement is prepared. This document has all the details like:

  • Terms and conditions
  • Loan amount
  • Tenure
  • Interest rate
  • Any additional charges

9. Loan Disbursal

Upon agreement, the bank moves swiftly to disburse the loan amount, which is typically reflected in the borrower’s bank account within 24 hours.

Final Thoughts

Personal loans are very popular in India and even abroad. So, if you’re planning to apply for loans, it’s good to keep the above steps of verifying bank statements for loan approval in mind.

The entire process might seem daunting. Yet, understanding this journey, from initial application to eventual disbursal, equips borrowers to prepare better.

As a cloud-based analytics platform, Precisa is changing the way we handle and view loans. It has a “Loans” tab that clearly lists all loan activities. You can see transaction details and start and end dates. You can also keep track of regular payments. If there are any missed payments, Precisa displays them in real time. Overall, it makes managing loans easier and keeps a clean financial record.

Redefine your approach with Precisa today!

  • Bank Financial Statement Analysis

Post navigation

Previous
Next

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Search

Categories

  • Bank Statement Analysis (133)
  • Credit Appraisal (35)
  • Digital Lending (122)
  • Fintech (82)
  • NBFC Software (3)
  • Understanding Precisa (21)

Recent posts

  • FOIR (Fixed Obligation to Income Ratio) Explained
    Fixed Obligation to Income Ratio Explained: Why Keeping FOIR Below 55% Is Crucial
  • Detecting Missing Transaction Months
    Detecting Missing Transaction Months: A Critical Fraud Prevention Technique
  • Account Aggregator
    Account Aggregator Integration: The Future of Consent-Based Financial Data Access

Tags

Account Aggreagtor AI in Fintech API To Get Bank Transactions Automated Bank Statement Analysis BaaS Bank Bank Accounts Bank Financial Statement Analysis Bank Statement Analysis Bank Statement Analysis API Bank Statement Analysis Tools BNPL Case Study cash flow analysis Co-Lending Credit Appraisal Credit Appraisal Software Tools Credit Bureau Data Quality and Integrity Digital Lending Due Diligence Embedded Finance Financial Data Analysis Tools Financial Inclusion Financial Industry Financial Security Financial Startups Financial Statement Analysis Software Fintech Fintech Companies Fraud Investigation GSTR GSTR Analyser Lenders Loan Management System Loan Rates Money Laundering MSME NBFC Open Banking P2P Lending Precisa RBI Transaction Categorisation

Continue reading

FOIR (Fixed Obligation to Income Ratio) Explained
Bank Statement Analysis

Fixed Obligation to Income Ratio Explained: Why Keeping FOIR Below 55% Is Crucial

September 30, 2025 admin No comments yet

Fixed Obligation to Income Ratio (FOIR) shows how much of your monthly income is already locked into fixed payments. This includes EMI payments, rent, and insurance premiums. When you apply for a loan, lenders assess your FOIR ratio to see if you can handle more debt. Most lenders in India favour your FOIR to stay […]

Automated Transaction Categorisation
Bank Statement Analysis

Automated Transaction Categorisation: How Technology Eliminates Manual Sorting for CAs

September 17, 2025 admin No comments yet

The role of chartered accountants has changed significantly over the past ten years. They are now expected to provide more insightful analysis, manage compliance, and offer strategic counsel in addition to keeping the books organised. However, one task still requires a significant amount of time: manually sorting through financial transactions. S͏t͏ud͏i͏͏e͏s show͏ ͏͏that ͏fi͏na͏n͏ce pr͏of͏e͏ssi͏ona͏͏ls […]

DSA Digital Transformation
Digital Lending

DSA Digital Transformation: From 2-Hour Manual Process to 30-Second Analysis

August 30, 2025 admin No comments yet

We see this often with DSAs—long days spent chasing leads, assessing eligibility, and preparing applications, only to have hours disappear into manual verification, document sorting, and fragmented compliance checks.  DSAs tell us the same thing repeatedly: processing a single case can take over two hours, slowing growth and making it harder to keep up with […]

Mumbai

403, Mayuresh Chambers, 4th Floor, Sector 11, CBD Belapur, Navi Mumbai, Maharashtra 400614

https://g.co/kgs/buJcESj
Pune

Rachana Park, 3rd Floor,Atreya Society,
Off. Senapati Bapat Marg,Wadarvadi, Pune,
Maharashtra – 411016

Links
  • Cancellation Policy
  • Terms Of Use
  • Privacy Policy
Subscribe to our newsletter

Sign up for our weekly newsletter to get the latest news, updates & amazing offers delivered directly in your inbox.




    © All Rights Reserved • Precisa • MADE WITH ❤️ & ⚡ IN INDIA.