8 Financial Practices You Should Avoid

By | December 13, 2016

Common Financial Practices That Are Illegal

Finances and money play a very important role in every individual’s life. All governments have therefore thrown a wide net of cautionary regulations around financial dealings. However, there are certain loopholes that have often been exploited. Some financial practices, although seemingly harmless, are illegal and can have various legal repercussions for violators.  Some others, while not illegal per se, are definitely not advisable. So don’t try hacking someone’s Credit Card unless you want to spend your best years washing pots and pans in prison.

Anyway, let’s throw some light on some of these financial practices so you can be sure to steer clear of them

1. Forgery

How many of us have playfully attempted scrawling out our parent’s signatures during our childhood years? In later years, many of us have even remembered signing a teacher’s note on our parent’s behalf.

As a popular saying goes – with age comes wisdom . As we’ve grown into adulthood, we’ve learned that forgery of an individual’s signature, especially for banking transactions, can lead to imprisonment. Forgery is a serious offence under the Indian Penal Code.

Additional Reading: Digital Signature Certificates Explained

2. Fabricating information in applications

We are constantly reminded during the application process for Loans that we must be careful to provide accurate information. However, to avoid having the loan application rejected or in an attempt to boost the loan amount, some people choose to provide inaccurate financial details, including fabricated copies of salary slips among others.

Remember, if this sort of disclosure is discovered during the scrutiny process, it amounts to a breach of contract that will guarantee rejection of a loan as well as legal action by the bank.

Additional Reading: Personal Loan Handbook

3. Concealing information in insurance policies

It is always beneficial to an insured person if they correctly declare all medical history, which could be relevant to an insurance policy. Many people seeking insurance conceal information about pre-existing diseases and past medical history in an attempt to lessen the waiting period before claims can be made on an insurance policy.

Additional Reading: Top 6 Reasons For Insurance Claim Rejection

4. Inflated insurance claims

Any unnecessary exaggeration of damages suffered when claiming Car Insurance is frowned upon. Always stick to the right figures and don’t claim excessively when taking advantage of your Car Insurance policy.

Additional Reading: Why Are Car Insurance Claims Rejected

5. Using someone else’s Credit Card 

It is very common for family members to use each other’s Credit Cards or Debit Cards to make purchases or withdraw money from an ATM. Though this practice is widely prevalent, it is in fact not permitted. Banks are constantly advising their customers on safe Credit Card practices to discourage fraud.

Additional Reading: Time To Go Cashless!

6. Issue of cheques without sufficient funds

It is rather common for people to issue cheques for payments without having sufficient funds in their accounts. This practice may seem rather trivial but be warned, dishonouring cheques can invite penalties under the Negotiable Instruments Act and the Indian Penal Code (IPC) with the punishment for violation being imprisonment.

Additional Reading: Beware Of Bounced Cheques

7. Filing incorrect Tax returns

While filing Income Tax returns, many people attempt to evade paying taxes by declaring inaccurate deductions, not providing the right documents, and hiding their true income. All that is needed is one tax notice from the Income Tax Department and they will be under the scanner.

Additional Reading: How To File Tax Returns Online

8. Not Handling Currency Properly

You may have seen notices in banks issued by the Reserve Bank of India regarding the correct manner in which currency should be handled. Next time, remember to give these notices a second glance. Defacing or damaging currency notes is deemed an offence. You are not allowed to write, stamp ink on, or use staples to hold currency notes together. This is where a rubber band comes in handy.

So, when it comes to money and finances, it would be in your best interest to take heed of what the law has to say.

Additional Reading: Check Your Money Personality!

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About Dheeraj Kapoor

BankBazaar is the world's first neutral online marketplace for instant customised rate quotes on Loans, Credit Cards, Insurance and Investment products. Shop for financial products just like you buy everything else now - online.

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