What is Central Point Verification (CPV) and how to conduct it?


Definition of Central Point Verification (CPV)

Central point verification (CPV) is a process by which one party (beneficiary) verifies the authentication of other party to provide any facility.

Why Central Point Verification is important?

Generally financial institutions use CPV in case of their lending. Generally, Banks provide credit facility to individuals or organizations. Before providing the facility bank need to verify the salary, income, present address and working address of applicant and also guarantor. Usually bankers issue a loan or credit card or any other facility based on some documents provided by customers. But they don’t know the authentication of these documents. In this circumstance, Bank uses 2nd party or 3rd party verification to check authentication.

Process of CPV:

A prescribed format of CPV form is provided with each credit facility proposal, where present address, working address, applicant’s name, of both applicant and guarantor with one copy passport size photo. After that the CPV form is provided to CPV agent to verify and visit the applicant and guarantor’s office and present address. After visit both address, CPV team provides a CPV report within three (3) to five (5) days. After getting the report from CPV agent, the authorized bank officials will approve credit facility on the basis of positive report otherwise decline the proposal (In case of negative report).

On the other hand, a bank statement withdrawal letter is provided to CPV agent authorized by applicants. CPV agents then withdraw the bank statement from applicant’s bank. It is done because there are many fraud case found in case of bank statement verification. To avoid this problem bank withdraw original bank statement. After receives bank statement, bank officials approve the proposal if bank statement found ok otherwise not.

Problems in case of 2nd party or 3rd party verification:

Now a day CPV problem is a burning issue. Banks are now in a harmful moment because CPV agents are now engaged with different unfair activities. They provide wrong report in favor of fraud customer. As a result banks defaulter rises day by day and bank faces loss.

How to solve the problem:

Bank can use the following remedial measure to reduce their default risk.

  1. Bank should conduct CPV through 1st party employee of bank.
  2. Strong monitoring require.
  3. Quarterly audit should conduct.
  4. CPV agent’s accountability requires.
  5. Strong punishment requires in case of engaged with any fraud. Punishment may monetary, legal action or may physical punishment or combination of all.

Click Here to Download CPV form provided by customer

Click Here to Download CPV report provided by CPV agent