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Home Articles Aadhaar Card Verification For Personal Loan

Aadhaar Card Verification For Personal Loan

IndianMoney.com Research Team | Updated On Thursday, October 11,2018, 05:02 PM

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Aadhaar Card Verification For Personal Loan

 

 

Aadhaar is a 12-digit unique identification number issued by the Government of India, to every resident of the country, by obtaining the biometric and demographic details of the individual.  The Aadhaar project was initiated towards having a single and unique identification document. Though Aadhaar can be used as a sole identification proof, it does not rule out functions of other identification documents.

Aadhaar is a versatile document that can be used as proof of identity, proof of address as well as age proof. It is fast becoming the government’s base for public welfare and citizen services. As the Aadhaar is based on the biometric details of an individual, it negates the possibility of misuse and can be deemed as a comprehensive and secure identity proof.

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Aadhaar Card Verification for Personal Loan

Benefits of Aadhaar card:

The Government had launched the Aadhaar card, with the aim to provide citizens with a base, to better access schemes and services. Since then it has changed the process of verification in a big way. The Aadhaar database helps avail various services like opening a bank account, availing personal loan, filing income tax returns and so on. The benefit of having an Aadhaar is it makes life easier by providing comprehensive data and has also serves to minimize corrupt practices.  Listed below are some important benefits of Aadhaar:

  • You can use your Aadhaar card to open a bank account through Pradhan Mantri Jan Dhan Yojana (PMJDY), the scheme that enables accounts to be opened with zero balance. You can avail benefits of various government schemes using Aadhaar.
  • You can verify ITR filing through Aadhaar. It is more effective and efficient and helps reduce documentation. Linking Aadhaar with PAN is compulsory to file ITR.
  • With the advent of the Aadhaar card, the time taken to process passports has reduced. You can avail passport in just 10 days. It is mandatory to attach Aadhaar details for passport application.
  • Aadhaar has reduced the need for pensioners to physically go to the bank. Pensioners can link Aadhaar card with the policy certificate. The details and authentication of beneficiary can be digitally accessed by the agency. This makes the process of accessing Digital Life Certificate easy.
  • Aadhaar enables easy provident fund disbursements. It ensures the provident fund amounts are directly sent to the pensioner’s account, if the Aadhaar details are liked to their pension account.

Aadhaar for financial inclusion:

Aadhaar has removed the various loopholes present in the paper based verification. The government expanded access to banks by increasing the number of branches. However, identification and documentation were still a time consuming task. Aadhaar lowered the operational costs through e-KYC, a technology to electronically verify customers and access details. This helped financial institutions speed up the process of sanctioning loans and access to other financial services.

Impact of Aadhaar on private sector:

With the Government making Aadhaar compulsory to avail government schemes and benefits, Aadhaar stands out as a reliable document. The private firms and institutions have started relying on Aadhaar to verify candidates while hiring and opening bank accounts. 

With digitization of the identification process, even finance providers have started relying on Aadhaar to provide easy loans and for quick loan disbursal. You can apply for loans online by attaching Aadhaar details. Previously, applying for loans was a rigorous task, as it required individuals to physically carry and submit documents to banks. Also, the verification process took much longer. To get loans approved, you would have to wait for weeks. However, with the launch of digital KYC, the process of applying for loans is simpler. It has accelerated the process of loan approval and disbursal.

Security concerns with Aadhaar:

This is a concern for the majority of the masses. Any security loopholes in Aadhaar database can lead to public data being misused. Today, Aadhaar database is one of the largest government databases that contains vital information on an individual. There have been a few instances where Aadhaar data got leaked.  There were reports of scammers generating fake Aadhaar cards and selling individuals details to service providers.

Launch of virtual IDs to protect data:

In order to improve security related to the Aadhaar database, the Government introduced the concept of Virtual ID. It is a 16-digit random number that can be generated by the Aadhaar holder on the UIDAI website. The virtual ID gives limited information on the individual which is just enough for the verification process.

A virtual ID helps keep certain information confidential. Any institution that needs to authenticate would get a virtual ID and receive a UID token that confirms it is mapped to the individuals Aadhaar.

SEE ALSO: How To Check Aadhaar Status?

How secure is Virtual ID?

Virtual ID is designed to protect the Aadhaar number thus reducing the chances of financial fraud. Aadhaar is based on an individual’s biometric and demographic details, therefore it is important to safeguard the data from being accessed or exploited by any institute or person.

Virtual ID provides an extra layer of security and displays some basic information during the identification process. It is temporary and revocable. A user can generate as many virtual IDs as he/she wants. Once a fresh virtual ID is generated, the older one gets cancelled.

The importance of Aadhaar in availing a loan:

Aadhaar card makes the process of applying and sanctioning loans easy. Though it is not a mandatory document to avail a loan, it inevitably saves time and effort to verify the documents of loan applicants. The customer verification in online loans is done through e-KYC, by using the Aadhaar as an ID proof. The use of Aadhaar in loans is the base of modern lending. Instant loans can be availed using Aadhaar, which will be disbursed within hours on verifying the applicant through e-KYC.

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The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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