The need to report to the bank on how the funds were spent arises only when receiving targeted loans. The responsibility that threatens the borrower for the misuse of money is spelled out in the loan agreement.
Responsibility of individuals for misuse of funds
Responsibility for the misuse of funds can arise only in the case of a targeted loan. They have recently become more and more popular, as they have lower interest rates. In this case, banks attach great importance to control over the intended use of money, since the subject of lending is also the subject of collateral.
As for non-targeted loans, which are most often issued in the form of cash loans, banks are often interested in the purpose of obtaining a loan, but they are not involved in checking where this money really went. For banks in this case, the main thing is that the user regularly makes payments on the loan.
It is worth noting that it will be extremely problematic for an individual borrower to spend money inappropriately. The fact is that most banks additionally insure themselves and transfer money immediately to the seller's account and do not give it to the buyers. For example, when a mortgage is issued, the money is immediately transferred to the developer's account, and when a car loan is issued, it is transferred in favor of the car dealer. Banks pre-check these outlets for the presence of suspicions of fraud. If the point of sale does not pass the bank's scoring, then even the most reliable and conscientious borrower will be refused a loan.
Responsibility for the misuse of credit funds must be spelled out in the loan agreement. These can be penalties, or a requirement from the bank to immediately return the full amount of the loan. Such a borrower with a high degree of probability will have problems with obtaining loans in the future.
The worst thing that can threaten for misuse of money is criminal prosecution, because such actions may be subject to
Art. 159 of the Criminal Code of the Russian Federation "Fraud".
Liability of legal entities for misuse of funds
Loans that are attracted by individual entrepreneurs and legal entities are in most cases targeted. They are provided for specific purposes. This can be the implementation of an investment project, or replenishment of working capital.
The execution of the terms of the agreement is controlled by the bank employee by collecting supporting documents for the transaction (agreement, invoice, invoice, etc.), as well as regular analysis of movements in the company's account.
The reasons for the bank's close attention to the areas of spending money lies in the fact that when granting a loan, the forecast for the return of money is based on the purposes of obtaining a loan. In case of misuse, the enterprise, for example, may not have enough working capital and it will have to refinance in another bank, which creates the risks of bankruptcy.
When revealing the facts of misuse of money, the bank will give an appropriate assessment of the reliability of the borrower. This will create certain problems in obtaining a new loan, providing a new tranche of the credit line. The bank also has the right to demand early repayment of the loan.
