Companies seeking loans from banks or financial institutions to fund their business are going to find it tougher. As per the recent government orders, the auditors of the loan-seeking company will have vouch for the robust health of the company in an affidavit before the loan is sanctioned.
The measure is to put an end to the rising cases of non-performing assets (NPAs) in banks and sanctioning loans to undeserving entities.
The screening for financial health would not end there. Banks will also have to validate and verify the balance sheet and profit and loss account of the loan-applicant company with the Ministry of Corporate Affairs before sanctioning loans. The instructions have been issued by the finance ministry based on a Central Vigilance Commission directive, chief vigilance commissioner K V Chowdary, said the report.