The Aadhaar card has changed the face of financial transactions in India. This unique document, introduced in 2010, has reduced the documentation for various processes. An Aadhaar card is issued by the Unique Identification Authority of India (UIDAI). It is a 12-digit number that is unique for every individual. The process of issuing an Aadhaar card requires various biometrics of the individual such as iris scan, and fingerprints. An individual’s demographics are also recorded during this process.
While it is not mandatory to link the bank accounts with your Aadhaar card, the Supreme Court of India has mandated the linking of Aadhaar to PAN. It is also mandatory to provide Aadhaar card details while filing the income tax returns.
Personal Loans using Aadhaar Card
Personal loans and Aadhaar Card loan are the solution to the financial problems of the middle-class in India. These loans prove to be of great help in emergencies such as weddings, medical emergencies and child’s education. To apply for a personal loan online, an applicant has to go through a lengthy process. Also, they have to submit heaps of documents during this process. To ease this process, lenders now offer personal loans on an Aadhaar card. This enables the borrower to complete the documentation process online with the help of e-KYC. The entire loan application process is paperless and saves a lot of time. The verification of the borrower is carried out with the help of the biometrics on the Aadhaar card. The applicant is not required to submit physical copies of any document.
Advantages of using Aadhaar Card while applying for a loan
- Aadhaar card reduces the need to submit multiple documents for the loan application. A single document can be submitted as age proof, photo ID, date of birth proof, etc.
- Aadhaar card can also be helpful if you have a credit score lower than 750. The lenders can ease the regulations for those who possess this document
- Possessing an Aadhaar card increases the chances of loan approval
- The Aadhaar card has made the KYC process easier. Online verification has become a lot simpler and faster
Documents required for Aadhaar card loans
Aadhaar card is used for the KYC of all your documents. Submitting this document reduces the documentation burden tremendously. However, after the latest judgement of the Supreme Court, Aadhaar card is no longer considered as valid address proof for financial transactions. Therefore, the applicant still has to submit a few other documents along with the Aadhaar card for personal loans in India. They are:
- Address proof (Ration card/Passport/Driving Licence/Rent agreement)
- Identity proof (Aadhaar card)
- Income proof (Salary slip/Form 16/bank statements)
- Recent passport-sized photograph
How to apply for a personal loan on Aadhaar card?
The application process for an Aadhaar card personal loan is quite simple. The applicant must check the documentary requirements before filling the loan application and keep their digital copies ready with them. The steps to apply for a personal loan online are:
- Calculate the loan amount you want to apply for
- Check your loan eligibility
- Calculate the personal loan EMI using a calculator
- Go to the official website of the chosen lender
- Select personal loans and click on ‘apply now’
- Fill in the loan application and upload digital copies of the necessary documents
- The loan application will be processed and a representative will guide you through this process
- Complete the e-KYC
- The loan amount will be credited to your account on approval
Risks associated with using Aadhaar card in financial transactions
As mentioned in the introduction, your Aadhaar card is linked to your PAN card. not only this, but it is also linked to your mobile number and bank accounts (for UPI transactions). This causes some discomfort in the applicants as to the safety while using their Aadhaar card for personal loan applications. However, the Government of India has created virtual IDs to ensure the safety and privacy of the individual during such transactions. The virtual ID created on the UIDAI website helps trace the original Aadhaar number of the concerned individual. Also, the previous virtual ID gets disabled as soon as a new one is created. All these and many other barriers protect consumers from data theft. However, it is always advisable to remain cautious while providing confidential information on any portal.