If you are in need of funds in an emergency, a personal loan can come to the rescue. However, banks require to complete the Know Your Customer (KYC) verification before giving you a loan.
The usual way of KYC verification, even when done online, can be time-consuming. But using your Aadhaar card, the process of getting an unsecured (personal) loan from your bank can be simpler as the Aadhaar card serves as a single document that fulfils all KYC requirements. It serves as your proof of birth, residence and identity.
An Aadhaar card stores all relevant information and can also be used to verify your biometric ID. This data is collected by the Unique Identification Authority of India (UIDAI).
“The timeline for verification and processing of applicants’ documents has reduced to a great extent since lenders are accepting Aadhaar card as proof,” says Arijit Sen, a Sebi-registered investment advisor and co-founder of Merrymind.in, a Kolkata-based financial advisory firm.
Since KYC can now be done electronically, one does not need to submit physical copies of documents. Many banks will approve a personal loan after you upload a scanned copy of your Aadhaar card.
However, some banks may also ask for your PAN card. If you do not have a PAN card, you may be asked for additional documents. Moreover, credit score plays a role in all loans, and especially in quick personal loans. If you have a credit score of 700 and above, your loan is more likely to be approved.
The Online Process
You can go to the website or the app of the lender and find out the loan amount you are eligible for. It is recommended that you compare several offers before making a decision. Once you fill in the required fields and apply for the loan, you will get a call from a representative. You will then be asked to upload your Aadhaar, and other relevant documents if needed. Once the documents are verified, your loan will be approved.
“Since the Aadhaar card is being linked to most of our essential documents like PAN, mobile number and bank accounts, there is always a possibility that the Aadhaar details could lead to identity theft. To address the issue, the government has created virtual IDs to ensure users’ privacy and ensure data protection,” says Sen.
The user can generate the virtual ID (a 12-digit number) through the UIDAI website, which helps trace the original Aadhaar number of the person. You can generate the virtual ID as many times as you want. Once you generate a new ID, the previous one will become invalid. “You can utilize this feature of virtual IDs to mitigate the data theft risk,” adds Sen.
While the process of getting a personal loan using an Aadhaar card is easy and secure, it does not mean that other factors such as interest rates change. Do remember that personal loans come with high-interest rates and should be the last resort. Avoid taking a personal loan to make impulsive purchases or to pay off existing debt.