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A borrower's closing or month-end balance looks strong, but the money was parked only for the statement date.
Compare the closing balance with the balances in earlier months, check how long the large credit stayed, and look for a matching debit soon after.
Six to twelve months of statements, month-end and daily balances, and the statement for the days after the period end where available.
An adjusted balance view that excludes temporary money, with a note asking the applicant to explain the credit.
Window dressing is parking temporary money in a bank account just before the statement date so the closing or average balance looks stronger than the normal position. The money usually comes from a friend, relative or linked business and leaves again within days. Lenders spot it by looking at the days before and after the date, not just the closing figure.
What does window dressing look like in a statement?
The pattern is usually easy to see once you know to look for it:
- A large late credit. A single credit, often in round lakhs, arrives in the last week of the period.
- Round amounts. Figures like ₹5,00,000 or ₹6,00,000 rather than invoice-like numbers such as ₹4,87,316.
- A matching debit just after. Almost the same amount leaves within a few days, often to the same sender.
- Flat low balances before. The earlier months show balances far below the closing figure.
How is it different from a genuine year-end inflow or a circular transaction?
| Pattern | What happens | Main test |
|---|---|---|
| Window dressing | Money parked for the statement date, then sent back | Short stay, same party both ways, no business reason |
| Genuine year-end inflow | Customer pays a real invoice in March | Invoice exists; money is spent on normal costs |
| Circular transaction | Money goes out and comes back again and again | Repeats through the year to inflate turnover |
Window dressing aims at the balance. Circular transactions usually aim at turnover. Both can appear in the same file.
Worked example: a June statement
An applicant applies on 30 June with six months of statements.
| Month-end | Balance |
|---|---|
| January to May (each) | about ₹21,000 |
| 26 June | ₹6,00,000 credited by IMPS |
| 30 June | ₹6,18,500 |
| 2 July | ₹5,95,000 debited |
At 30 June the balance is about 29 times the earlier month-end level. The average of the six month-end balances is (₹21,000 × 5 + ₹6,18,500) ÷ 6 = ₹7,23,500 ÷ 6 = ₹1,20,583. That figure is misleading.
Now use average daily balance over 181 days (January to June). The ₹6,00,000 sat in the account for 5 days (26 to 30 June), so it adds ₹6,00,000 × 5 ÷ 181 = about ₹16,575. The daily average is therefore close to ₹38,000, not ₹1,20,583. If the July statement shows ₹5,95,000 leaving on 2 July, the case is clear.
Why does averaging every day help?
A month-end balance is one day out of thirty. Average daily balance counts all of them. Money that stays for 5 days out of 181 carries less than 3% of the weight. Checking the days after the statement date adds a second test: if the money left straight away, it was never part of the normal position. Many lenders use daily averages for this reason, but each lender sets its own method.
What to read next
Window dressing often sits next to round-tripping, so read what circular transactions are in a bank statement next. For the wider picture, see which signals matter most in bank statement analysis and counterparty spread analysis.
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