January 06, 2020
It has become easier to get a loan. You’re surprised to hear that?
With the advent of the Aadhar card, it has become easier for individuals to apply for a personal loan since the card serves as the identification, age, citizenship and address proof. Earlier, people had to gather multiple documents to provide their credentials to the lenders which were a troublesome process. Due to mistakes in different documents, often people used to be denied of getting a personal loan or the entire process used to get delayed.
How did the Aadhar Card come into existence?
The government of India launched the card in 2010 to cater to different sections of the society and make it easier to identify Indian citizens. It contains a 12-Digit Unique Number which is given to individuals by the government after obtaining the fingerprint and iris scans of the people.
It has made the process easier since you don’t have to provide multiple documents to avail a service. Aadhar Card helps in getting a personal loan, PAN Card, opening a bank account, getting a SIM Card, filing an RTI, and various other services as such. It has helped greatly in financial services and fin-tech platforms where you can transfer money without going to the banks directly. Also, you can approach the financial institutions directly through this service.
How to use Aadhar Card in getting a personal loan?
Presently, many lenders - NBFC’s and Banks use Aadhar Card as an identification proof or KYC (know your customer) of the borrowers. Although not mandatory, Aadhar is accepted widely and it makes the process quite simple for the lenders. Because it is easier to verify information given on the Aadhar by the lenders only by giving your Aadhar Details.
Another way to get a personal loan via this card is a paperless process known as e-KYC. In contrast to KYC, through this, you can submit your documents entirely online. You won’t need any physical documents to be submitted. In fact, you can also get instant loans on this basis, if you upload a copy of your Aadhar Card online.
Aadhar serves as KYC for all your documents. You can get an Aadhar Card Personal Loan through these documents and alternatives -
- Address Proof - Ration Card/Passport/Rent Agreement/ Driving Licence/Utility Bill
- Identity Proof - PAN Card/Aadhar Card/Driving License/ Voter ID/Passport
- Income Proof - Recent Form 16 or last three month’s income slips/bank statements
- Business proof (If self-employed)
These are the alternatives and other documents used in place of Aadhar Card. However, the document requirements are lender specific too.
Benefits of using Aadhar Card for a personal loan
There are several benefits of using an Aadhar Card to apply for a personal loan.
- Aadhar Card is a single document which provides proof of citizenship, age, address and identity
- It can be used for e-KYC (online purposes and verification)
- It provides comfortable access to multiple financial services just by providing this document as all the lenders ask for identity proof.
Aadhar Card also helps in getting instant personal loans if you have a CIBIL Score above 700. It saves a lot of time for the lenders for verification. KYC proof can only be represented through this card. If not, then you will require a PAN Card, Passport size photographs, Income Proof, and other documents to prove your credibility.
Impact of Aadhar Card
The government has made it compulsory for the lenders, both banks and financial institutions to collect the KYC details of borrowers. Applicants who require any financial service must have their KYC (Know Your Customer) documentation done. It helps in avoiding money laundering.
Presently, it has become very easy to get KYC done in contrast to earlier times when a lot of documents were required. Several financial institutions have started with e-KYC where the entire process is held online. Since Aadhar Card has biometric details of an individual, the verification process for loans has become easier for the banks.
There is a very rigid process of verification when it comes to personal loans. Since personal loans are mostly taken in emergencies, quick verification is required for the same. Here, Aadhar wins that purpose of fast verification due to its biometric data and the loan amount is disbursed quickly to a borrower.
In conclusion, digitization has helped a lot in faster loan approvals and accessing financial institutions. Aadhar Card has made the process simpler in terms of documentation and verification and has ensured quick disbursal of loans for applicants. But before applying, check for the documents which can be lender specific and your process will become simple and easy.