Why don’t people simply borrow large sums from banks and disappear?
Banking
Asked by Question Bot06/Dec/20141 answer
1 Answer
F
Faisal Khan
Answered 06/Dec/2014
Very, very few people are successful in scamming the banks, i.e. taking high-value loans and then defaulting and disappearing.
Banks have become very good at what they do. The process by which you, your credit history and/or business is checked for, has matured over the years and banks are able to do a very good job of finding out exactly how much of a default/flight risk you pose. All risk is usually balanced by a collateral (though this is not always the case).
Big lonas would typically be given out to company (business accounts), not to individuals, and within a business account, there would most likely be multiple signatories.
This does not mean that people haven't tried this. It happens a lot in the developed world and the developing world. Bad loans portfolio exists everywhere. Most of these bad performing loans are due to the bad business practises or bad performance of the company etc. Very few come under the wilful default and intent to cheat / defraud.
Those who do try to fraud the banks with loans they take with no intention of paying them, the banks will spend a large portion of energy and money in ensuring that you are prosecuted to the fullest extent of the law.
Banks have become very good at what they do. The process by which you, your credit history and/or business is checked for, has matured over the years and banks are able to do a very good job of finding out exactly how much of a default/flight risk you pose. All risk is usually balanced by a collateral (though this is not always the case).
Big lonas would typically be given out to company (business accounts), not to individuals, and within a business account, there would most likely be multiple signatories.
This does not mean that people haven't tried this. It happens a lot in the developed world and the developing world. Bad loans portfolio exists everywhere. Most of these bad performing loans are due to the bad business practises or bad performance of the company etc. Very few come under the wilful default and intent to cheat / defraud.
Those who do try to fraud the banks with loans they take with no intention of paying them, the banks will spend a large portion of energy and money in ensuring that you are prosecuted to the fullest extent of the law.