If you think a ‘loan on Aadhaar card is a financial product similar to a loan on credit cards, you are highly mistaken. It is not possible to get a loan using your UIDAI-issued identity card, nor can you borrow money against your Aadhaar card. So, phrases such as ‘loan on Aadhaar card,’ ‘personal loan on Aadhaar,’ and ‘Aadhaar card loan’ are misleading and can create a lot of confusion. So, here is a fact. There is no financial product as a loan on Aadhaar card; however, you can definitely use this UIDAI (Unique Identification Authority of India) ID to get a loan along with other supporting documents as outlined by your prospective lender.
When an Aadhaar card is used as a paperless e-KYC document to get a personal loan, it is commonly referred to as an Aadhaar card loan. The Aadhaar card fulfils your eligibility criteria for biometric verification, and so, the overall process of getting a personal loan approval becomes much simpler and faster.
Earlier, when you had to apply for a personal loan, you had to submit a plethora of documents. But now, Aadhaar card and digitalisation have made it much simpler to apply for a personal loan. Your Aadhaar card is a single document that is KYC proof and is accepted by most banks and NBFCs as proof of identity, residence, citizenship, and birth.
To apply for a personal loan using your Aadhaar card, all you have to do is fill in an online personal loan application, and provide your Aadhaar number. If your Aadhaar card is linked to your PAN and your bank account, you don’t have to upload extra documents for the same. You just have to provide your address and income proof and give permission to the lender to carry out background checks based on your Aadhaar card. Once you clear the eligibility and verification checks, the personal loan will be approved, and the funds will be transferred to your account within a couple of days, or maybe sooner.
Note: According to a recent circular released by the RBI, Aadhaar card cannot be used as address proof for financial accounts such as loans or deposits. This is the reason why you still will need to provide a valid address proof such as electricity bill, passport, driving license, rent agreement, etc. while applying for a personal loan.
Once you submit your online loan application using your Aadhaar card, your eligibility will be verified, and on the basis of it, the loan will be sanctioned.