Personal loans have become a popular financial product in India, and several banks and non-banking financial companies (NBFCs) offer these loans to eligible individuals. When a consumer applies for a personal loan, they need to provide certain documents to the lender. In this blog, we will discuss the documents that banks and NBFCs typically ask for and their importance.
- Identity Proof: Banks and NBFCs require borrowers to provide a government-issued identity proof document, such as a PAN card, Aadhaar card, or passport. These documents help the lender verify the borrower’s identity and ensure that the loan is not being taken under a false identity. Additionally, identity proof documents also help in complying with the regulatory requirements for Know Your Customer (KYC) norms.
- Address Proof: Banks and NBFCs also ask for a government-issued address proof document, such as a voter ID card, driving license, or utility bills. These documents help the lender verify the borrower’s address and ensure that the borrower is not a defaulter or on the blacklist of any financial institution. Additionally, address proof documents also help in complying with the regulatory requirements for KYC norms. Address proofs may be asked for both your current address and your permanent address.
- Income Proof: Banks and NBFCs require borrowers to provide income proof documents to assess their ability to repay the loan. Income proof documents may include salary slips, bank statements, income tax returns, or Form 16. These documents help the lender determine the borrower’s income level and repayment capacity, and ensure that the loan is repaid on time.
- Employment Proof: Banks and NBFCs require borrowers to provide employment proof documents to verify their employment status. Employment proof documents may include an employment contract, appointment letter, or a letter from the employer. These documents help the lender assess the borrower’s job stability and repayment capacity.
- Bank Statements: Banks and NBFCs require borrowers to provide bank statements to verify their income and expenses. Bank statements help the lender understand the borrower’s financial behavior, such as their spending habits and savings. Additionally, bank statements can also help the lender identify any red flags, such as frequent overdrafts or bounced checks.
- Other Documents: Banks and NBFCs may also ask for additional documents, such as a credit report, property documents, or guarantor documents, or relationship proofs depending on the loan amount, tenure, and other factors. These documents help the lender assess the borrower’s creditworthiness, collateral, or credit risk.
Importance of Documents: The documents requested by banks and NBFCs are crucial for the loan approval process. These documents help the lender assess the borrower’s eligibility, creditworthiness, and repayment capacity. By verifying the documents, the lender can mitigate the risk of default and ensure that the loan is repaid on time.
How to Get the Documents? You shall have access to most of these documents readily – especially now that Government has made getting PAN and AADHAAR Cards easier. To get the required documents not with you, borrowers need to visit the respective authorities, such as the Income Tax Department, Registrar of Companies, or the Bank, to obtain them. Additionally, several documents, such as bank statements, can be downloaded online or obtained from the bank’s branch.
In conclusion, when a consumer requests a personal loan, they need to provide certain documents to the lender. These documents help the lender verify the borrower’s identity, address, income, employment status, and financial behavior. By providing the required documents, borrowers can improve their chances of loan approval and ensure that the loan is repaid on time. It is essential for borrowers to keep these documents updated and readily available to expedite the loan approval process.
If you want to apply for our Omozing Loan, we shall need similar set of documents from you.