Three out of five consumers surveyed in India believe it is normal for people to exaggerate income on loan applications, according to a report on people’s attitudes toward first-party financial fraud.

The survey by global analytics software company FICO stated that more than a quarter (27 per cent) of Indians believe it is normal for people to deliberately misrepresent their income on mortgage applications.

"Three in five consumers (63 per cent) think it is OK or normal for people to exaggerate their income on loan applications, significantly more than the global average of 39 per cent," the survey said.

More than half (54 per cent) believe it is normal to falsify insurance claims, the global survey which examined 1,000 people in India said. Many Indians consider it fine to exaggerate income on personal loan applications, further complicating financial integrity.

Just one third (33 per cent) of consumers believe it is never acceptable to exaggerate income on a personal loan application, while another third (35 per cent) finds it acceptable under specific conditions.

“With over 60 percent of Indian consumers viewing income falsification as acceptable or justified, banks face a very real problem of 'liar loans' that could skew risk assessment and increase bad loan rates,” said Aashish Sharma, APAC segment leader for risk lifecycle and decision management at FICO.

As many 1,000 Indian adults were surveyed, along with approximately 12,000 other consumers in Canada, U.S., Brazil, Colombia, Mexico, The Philippines, Indonesia, Malaysia, Singapore, Thailand, U.K. and Spain.

Globally, attitudes are notably different, with the survey revealing the majority of consumers (56 per cent) firmly reject the idea of exaggerating income on loan applications, viewing it as never acceptable. Just, one in four (24 per cent) consider it permissible in certain circumstances, and only one in seven (15 per cent) view it as a normal practice, the report said.

"Many consumers may not see this as harmful behaviour, but it’s important to understand that when applying for financial products, applicants typically certify that the information they provide is accurate," Sharma said.

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