Is It Safe for HR to Provide Address Proof Letters for Employee Bank Loans?

Dear Professionals,

One of our employees is applying for a bank loan, and he is asking the HR Department to provide an address proof letter from the company as per the bank's request. Is it legal to issue this kind of letter to employees? If we provide the letter, could the company be held liable if the employee is unable to repay the loan amount?

Thank you.

Hi,

I would not suggest or recommend HR giving any proof of address for the employees on the rolls. It is for the employee concerned to provide proof of address.

Regards

Dear Friend,

If the bank is requesting it, then there should be no problem for HR to confirm your address on their records through a letter. However, HR should be willing to do so. In my opinion, there is technically no roadblock.

Warm Regards,

Bharat Gera
HR Consultant

Hi,

Yes, the employer can issue a letter but must incorporate the following:
a. His address as per proofs provided and recorded in his Service Record is as follows:
b. The last line must read, "The Company is in no way liable for the loan granted to the Employee, in case he defaults in his repayment."

Hope the above helps.

Thank you,
Regards,
R. H. Kavarana
HR Manager, Mumbai

Issuing Address Proof Letters for Bank Loans

Most of the time, banks ask for such letters from customers when they don't have any address proof of their current city. There is nothing wrong with issuing such letters to permanent employees (to build a certain amount of reliability and trust over time); however, it is not advisable to issue letters to temporary, third-party payroll, and contract employees. You can clearly mention in such letters that, as per our records, his/her temporary address is so and so, and this letter is being issued for the sole purpose of obtaining a loan from the bank.

The request is benign. The bank cannot fasten any liability on the employer just because the information, as sought, has been furnished.