Bank statements reflect your payment capacity, saving habits

What do banks look for when they ask for bank statements? Are they checking my bank balance or monthly expenditures?
    —Shankar Prasad 
Banks use your income-related documents to study your financial status. The bank statements you submit are scrutinised for:
Level of activity in the case of self-employed persons — this gives a very good clue about the extent of business activities.

Average bank balance — a cursory glance at the average bank balances maintained in a savings bank account speaks volumes about the spending/saving habits of any individual.

Cheque returns — a small charge debited by your bank in the statement indicates that a cheque issued by you was returned by your bank. Many such cheque returns can have a negative impact on your loan sanction.

Cheque bounces — if cheques deposited by you are returned by the issuer’s bank, they will be visible in your bank statement and again, banks have specific norms as to how many such returns are acceptable in a period of one year.

Regular periodic payments — the existence of periodic payments to other finance companies/banks, etc indicate an existing liability and you will need to provide full details to the lender.

Your investments also come under the scanner through the bank statement. This helps the bank to estimate your ability to pay the down payment as well as your savings habit.

The writer is CEO, Apna Paisa, a price & features comparison engine for loans, insurance and investments.
He can be reached at hrdna@apnapaisa.com.