After the Supreme Court verdict on UIDAI’s (Unique Identification Authority of India) Aadhaar, many are still confused regarding the use of Aadhaar for availing various financial services. One such area of confusion is the use of Aadhaar for availing loans such as personal loans. In the following sections, we will discuss the truth regarding loan on Aadhaar.
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What does Loan on Aadhaar mean?
While many might think that a loan on Aadhaar means that one can borrow money using their Aadhaar card, similar to a loan on credit cards, this is definitely not true. In fact, as of yet, it is not possible to get a loan using just your UIDAI-issued identity card. Thus phrases like “loan on Aadhaar card” or “personal loan on Aadhaar card” tend to be a bit misleading. No such product exists as of yet even though you can definitely use the UIDAI ID to avail a loan provided you have submitted other supporting documents as required by your prospective borrower.
How can Aadhaar help you get a Personal Loan?
While the document issued by UIDAI is not a proof of citizenship, it can act as a photo identity and address proof in case you are applying for a loan. But you can also use other photo ID/address proof documents such as Voter ID card, Driver’s License, Passport, etc. to apply for a personal loan using Aadhaar. Such identity/address proof has to be provided along with other key documents such as PAN, salary slips (for salaried), profit and loss statement (for self-employed), etc. when availing the loan.
Which financial services mandatorily require Aadhaar Card?
While Aadhaar is not mandatory when applying for a loan, there are certain types of transactions for which the document is mandatory. The following are the key ones:
- To apply for PAN (Permanent Account Number) card
- To avail any of the government subsidies operating using the DBT (direct benefit transfer) mechanism such as LPG, direct cash transfer for food grains, Pradhan Mantri Vaya Vandana Yojana and so on.
- To file your income tax returns as Aadhaar-PAN linking is now mandatory.
So, while “personal loan on Aadhaar” is definitely not a financial product that currently exists, you must have this key document in order to avail some key financial services offered by the Government.
Further reading: Is Aadhaar Card Mandatory?
