All the attention over the privacy aspects of Aadhaar has diverted the conversation from the legitimate uses of a biometric ID, such as weeding out multiple PAN cards linked to the same person, according to a number of lenders.
The issue, they said, is that many unscrupulous people run up huge loans associated with one PAN, and then do the same with a second PAN that was created using different details. A PAN-Aadhaar linkage would fix this problem easily, and could potentially save lenders a lot of money.
“The issue is that as per compliance rules and RBI, any individual who is salaried and pays tax in India should have only one PAN,” Anubhav Jain, Head of Risk, Co-Founder of Qbera told The Hindu . “A lot of customers that come to us and apply for a loan, what we figure out using multiple data sources, is that they have two different PANs allotted to them.”
“What people with bad credit histories try to do is to try to create a dual identity for themselves,” Mr. Jain explained. “They change their phone number and address and create another PAN. The credit bureau will assume this is a separate person. This will not happen going forward because the unique identifier will be Aadhaar.”
“In the banking system it is a big issue, as I saw when I was at ICICI Bank and with IndusInd Bank,” Satyam Kumar, co-founder of LoanTap said. “As a lender, I can say it is a big issue. If you look at the percentage of loan applications, then these will be only 4-5%. But the point is, it’s these 4-5% of the customers where you are going to have the maximum loan defaults coming in. A PAN-Aadhaar link could save lenders a lot of money”. Companies have had to develop robust checks to eliminate such people from their loan applicants, and still some get through.
“The minute the person comes onto our app, he gives his PAN,” Anuj Kacker, co-founder and COO, MoneyTap said. “We do a live check with NSDL, which weeds out some of them, then at the second level we check for any duplications in the details such as phone number, address, etc. At the third level, we have an experienced team of under-writers who try to figure out who has multiple PANs.”