Vendor due diligence checklist for Indian businesses
A new supplier, distributor or service vendor gets access to your money, your goods and sometimes your customers. Most are genuine. But fake firms, shell companies and changed bank accounts are among the most common business frauds. A standard checklist at onboarding catches most problems before the first payment.
Why vendor verification matters
- Fake or shell firms that disappear after an advance.
- GST mismatch that can affect your input tax credit.
- Bank account fraud: payments sent to an account not in the vendor's name.
- Address that does not exist or is only a mailing address.
- Conflicts of interest: a vendor secretly linked to an employee.
The checklist
- Registration: company or LLP details from the official registry; partnership or proprietorship proof.
- GST: GSTIN active, legal name and address matching.
- PAN of the business and the owners or directors.
- Bank account: the account holder's name matches the vendor.
- Address: the office, shop or factory actually exists and operates.
- Owners and directors: identity, and any court cases.
- Capacity: staff, machinery, stock, compared with what they promise.
- References from existing customers.
Do not skip the site check
Documents can be correct while the business behind them is not. A live look at the premises (people working, stock, signboard, machinery) tells you more than any certificate.
Warning signs during onboarding
- The vendor pushes for a large advance before any delivery.
- The GST legal name and the bank account name are different.
- The "office" is a co-working desk or a residential flat with no sign of business.
- Bank details change by email soon after onboarding. Always confirm a change by calling a number you already have.
- The vendor was introduced by a single employee who also approves their bills.
How Praman makes it easy
Praman by SatyaSakshi combines instant checks (company, GST, PAN, bank account, with consent) with a recorded video site visit. The vendor's authorised person gets a WhatsApp link, shows the premises on a live call with GPS location, and answers your onboarding questions. Procurement and finance teams get one report per vendor and a record they can show in an audit.
Frequently asked questions
What documents should a new vendor provide?
Usually the company or firm registration, GST certificate, PAN, cancelled cheque or bank letter, address proof and the authorised person's ID.
Why verify the vendor's bank account?
Payment fraud often works by changing the bank account. Confirming the account holder's name matches the vendor prevents payments going to the wrong account.
How often should vendors be re-checked?
At onboarding, and again yearly or whenever bank details, ownership or address change.
Related: how Praman handles this for businesses · all instant checks
Make verification simple with Praman
WhatsApp link, AI or live video call, instant ID, vehicle, business and court checks, and one evidence report. Built by investigators at SatyaSakshi.
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