8 common money habits which are illegal

TomorrowMakers ™

8 common money habits which are illegal

25 July 2016
When it comes to money and financial matters, it’s usually better not to take a shortcut.

Given how important money is to our lives, governments across the world have always cast a thick web of regulations around money in order to maintain order. However, certain money habits, which are otherwise harmless, can qualify as being illegal in our country and can land you straight in jail.

So how many of these habits do you have?

#1: Forgery

When you’re growing up, it can be fun to try and copy your parents’ signatures, and maybe even sign a teacher’s note on ‘behalf’ of your parents. However, a couple of years down the line, if anyone forges someone else’s signature to withdraw cash or pay for a new purchase of any sort, it can be grounds for imprisonment as it as an offence under the Indian Penal Code (IPC).

Related: 8 financial steps to take before you have a child

#2: Loan forms

In fear of getting the loan application rejected, or to increase the sanctioned amount, people misrepresent the details and even furnish forged copies of payslips etc. In case this lack of full disclosure is discovered, not only is it a breach of contract that will get your loan rejected, your bank can also enforce its rights in a court of law, if need be.

#3: Insurance proposal

An insurance contract is based on utmost good faith. Many people do not correctly disclose the details of pre-existing illness/medical history in the application form to ensure that policy is accepted by the insurer at no extra premium. This qualifies as a breach of insurance contract and can also lead to claim rejection in your time of need.

Related:  5 reasons your car insurance claim can get rejected

#4: Insurance claim

Inflating the amount of damages incurred to you, just to claim a higher reimbursement from the insurer, is an illegal practice. Apart from the risk that the insurer can cancel your insurance policy and not give you the pay-out, the insurer can also take action against the policyholder in a court of law.

Related: Death Claim: Is it possible to claim from more than one Life Insurance policy?

#5: Credit card usage

Sometimes people use a family member’s or a friend’s card for shopping or withdrawing money from the ATM. Though it sometimes goes through without a hitch, strictly speaking, it is not allowed. As per banking rules and to ensure security, a card must not be used by any person other than its owner.

Related: 5 situations where you should never use a credit card

#6: Cheque issue

A seemingly harmless habit, many people issue cheques either unknowingly or fully aware of the fact that the bank account does not have sufficient funds. This can invite extreme penalties under the Negotiable Instruments Act and the Indian Penal Code, and may even lead to imprisonment.

#7: Tax returns

Many people try to fool the taxman by claiming wrong deductions, faking documents and suppressing income in their tax return, but one scrutiny notice from the tax office is all it takes to make them liable for penalty and prosecution under the Income Tax Act.

#8: Mishandling of currency

Defacing/mishandling of currency is an offence. From time to time, Reserve Bank of India (RBI) has been educating general public on its “Clean Note Policy” which includes not stapling, writing,  putting rubber stamp or using notes for making garlands/toys etc. One should remember these rules in day to day life.

Related: 11 financial mistakes Indians commonly make


A slew of laws and regulations means one has to be very careful dealing with money and financial matters. It is better to not take a short cut, find oneself violating the law, and then face the consequences.

Market Quotes by TradingView

Quotes of The Day




How does GST impact your wallet?

How does GST impact your wallet?

Deemed as the biggest tax reform, what does GST have in store for your finances?

What does it cost to educate your child in India [Infographic]

What does it cost to educate your child in India [Infographic]

Education is a gift we all want to give our children, but as it gets costlier every year, it becomes more and more essential to plan our financial from the start to ensure that we can afford to send them to quality institutions.

6 Documents that must be linked with your Aadhaar card

6 Documents that must be linked with your Aadhaar card

There are several documents you need to link to your Aadhaar card. Here’s what you must know about them.

8 Financial steps to take before you have a child

8 Financial steps to take before you have a child

From health insurance to stem cell cover, maternity benefits to will preparation, there are some important steps every to-be-parent must take before they have a child.

Short term investment options for high returns

Short term investment options for high returns

Looking to earn maximum returns in a quick and easy manner? Find out 6 investment option on how exactly you can do short term investment to get high returns.

Lazy investor's guide to investment [eBook]

Lazy investor's guide to investment [eBook]

Want to invest but don't know where to start? Here's all you need to know

Where There Is a Way, There Can Be a Will

Where There Is a Way, There Can Be a Will

If you haven’t made your will yet because you feel it’s a tedious process, here are some important things you should know.


We would love to hear from you!

Question, comment or concern? Our contact form is the best way to get in touch. We will respond to you within 5 working days.