Why Do Lenders Need Bank Statements: Everything you need to know

  • Published on: 5 Apr 2024
Why Do Lenders Need Bank Statements: Everything you need to know

Why do lenders need bank statements, you wonder? Well, these documents record your income and expenditure. So, lenders use them to check the stability of your earnings while ensuring that you have enough funds in your account to successfully repay the loan. 

This evaluation affects your chances of approval as well as the amount you may get. Read on to learn what lenders are looking for when they ask for your bank statements.

Information Lenders Check in Your Bank Statements

When you submit these documents, financial institutions check the following:

Monthly Income

When you apply for a loan, lenders ask you to state your monthly income. With the help of the bank statements, they verify the following:

  • The income that you get from your employer
  • The frequency at which you receive the payments

Expenses and Payments

Before approving your application, financial companies check your spending patterns and your recurring expenses. This is important as they decide on approval after checking if you can add another EMI to your budget or not. 

These recurring expenses may include:

  • Your loan EMIs
  • Your credit card bills
  • Your electricity and gas bills
  • Your internet and phone bills
  • Your monthly subscriptions
  • School/tuition fees of your children


In addition to your income and expenses, financial institutes also check the average cash withdrawals you make through your account. Here’s what they check:

  • If the withdrawals are regular and of smaller amounts, they are considered acceptable 
  • If the withdrawals are irregular and of huge amounts, lenders may view them as red flags

Cash Reserves

To pay your loan successfully and on time, you need to maintain an optimal balance in your bank account. By asking for your bank statements, lenders check the cash reserves you have. Here’s what they conclude:

  • If you have an optimal balance in your bank account, they will approve your application quickly
  • If the balance is on the lower side, they may view you as a high-risk borrower

New Credit Accounts

Loan companies also see if you have any new credit accounts. This is because when you have multiple payment obligations, managing your finances may be difficult, and you may default on your loan. They look for credit accounts like:

  • Home loans
  • Personal loans
  • Auto loans
  • Business loans
  • Travel loans
  • Credit cards

Overdrafts or Bounced Cheques

With this document, lenders can also get information about your overall financial health. This includes:

  • Overdrafts on loans or credit cards
  • Bounced cheques

When you apply for an overdraft or when your cheques bounce, it implies:

  • You have a shortage of funds
  • Your expenses are more than your income
  • You have a high dependence on credit

Also Read: What is an Overdraft Facility?

Points to Keep in Mind While Submitting Your Bank Statements

While providing your documents, consider these points to safeguard your finances:

Check the Authenticity of the Financial Institution

Before submitting your private documents, do the following:

  • Check if the financial institute is legitimate
  • Look for past customers and check their reviews
  • Check if the lender’s website runs on the HTTPS protocol
  • Ensure that the website or the portal of the financial institution is end-to-end encrypted

Pay Attention to Where Lenders Intend to Use the Information

Prior to sending your documents, pay attention to why the lender needs your financial information. You should only send your financial documents for the following:

  • While applying for loans and credit cards
  • While using a rental service
  • While filing or appearing in a legal case

Clear Your Doubts and Queries Thoroughly

Since these documents hold your private data, its natural to be worried about submitting them. To relieve your worries, clear your doubts in these ways:

  • Contact the customer care representative of the financial institution
  • Go through the terms and conditions of the loan or credit card
  • Check the FAQs section on the lender’s website or portal

Monitor Your Bank Account for any Suspicious Activities After Submission

Just submitting the required documents is not enough. To ensure the safety of your finances, monitor your bank account consistently for a few days or months. In case you find any suspicious activities in your account, report it to the following:

  • The financial institution that holds your bank account
  • Cybercrime branch of your city/country

Now that you have an answer to, ‘Why do lenders check bank statements’, you can plan your application smartly. If you want to get funds with minimal formalities, consider getting an Instant Cash Loan of up to ₹5 lakhs from Fibe.

These funds are available at competitive interest rates and flexible repayment plans. Download our Personal Loan App or apply directly through our website. 

FAQs on Why Lenders Check Bank Account History

Do lenders look at bank transactions?

Yes, lenders ask for bank statements to assess your financial standing via:

  • Your monthly income
  • Your spending patterns
  • Payments towards loans and credit cards
  • Payments towards recurring expenses

Which financial statement is important to lenders?

Lenders generally ask for these if you’re applying for a personal loan:

  • Income statement 
  • Salary slips

If you’re getting a business loan, they ask for these documents:

  • Profit and loss statement or income statement
  • Balance sheet
  • Cash flow statement

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