What are the Required KYC Documents for Loan Approval?

KYC helps financial institutions to understand their customers and their financial patterns better. KYC also helps prevent fraud, identify money laundering, and help manage risks prudently. For loan procedures, KYC helps to establish a customer’s identity and legitimacy which is essential to avail financial services. Once you apply for a loan or any other financial product, you are required to complete the KYC procedure. The information provided by you is verified by the financial institution. The verification can take a few minutes or up to a few hours to be completed. Once it is done, the financial institution will go ahead with providing the product you have requested.

What is the KYC Documentation Process for Loan Approval?

It happens quite often in life that we take up a loan for various purposes, be it - purchasing a house, buying a car, or even just for personal purposes. To get a loan, the lender will ask you to fulfil the KYC process. The process needs to be successfully completed for getting your loan approved. 

Must Read: What is Video KYC & How You Can Avail it for Personal Loan?

To get a loan approved, you need to provide the requisite KYC documents. 

The official valid documents required for KYC purpose include:

• Identity Proof.
• Address Proof.

The KYC documents that can be provided for identity proof are:

1. Identity Proof

In this aspect, the documents provided are to confirm the legitimacy of the customer. Documents required for the same are - 

• Your Address Proof – such as Aadhaar card , voter ID card, driver's licence, or passport. 
• Your PAN card. 
• Any document issued by the State or Central government in your name that may be essential as identity proof shall be submitted. 
• You shall also provide your ID card of affiliation with any college or professional institute. For example, if you are working with an organisation, you can provide its identity card as a reference. 
• As the identity proof is being done for loan purposes, you can also disclose your debit or credit card that consists of your name. 

2. Address Proof

A person’s address is vital for verifying the customer’s identity as well as the place of residence. It helps assess the risk situation accurately. Documents required are -

• If you are the owner of a house, or are on a lease, you will need to provide address proof. The documents accepted by the bank for the same are voter’s ID, driving licence, or passport. You can also submit your registered sale agreement. 
• Your electricity, maintenance, or telephone bill that has your current address needs to be provided. The bills shall not be older than 3 months for accurate current data. 
• Any other address proof that is issued by a high power holding entity like – a scheduled co-operative bank, notary public, or any statutory authority or government of India can be submitted. 

Apart from residence, office or employment address proof will also be required. Once your identity, as well as address proof, is verified by the bank or the lender, the chances of getting your loan approved are high. Other factors such as income, credit score, and so on have an impact on your chances of getting your loan approval. 

3. Income Proof

Salaried individuals need to submit salary slips of the past 2-3 months. Self employed individuals need to provide proof of income such as audited financial statements, ITR, etc.

4. Bank Statements

Past 6 months bank statements need to be provided

These are basic documents for a personal loan. Please keep in mind that depending on the product and the lender’s policy, additional documents may also be requested.

Conclusion

Even though KYC may seem like a hassle to many people, it helps banks as well as financial institutions maintain their security and carry out due-diligence for all transactions. SMFG India Credit helps you apply for loans and upload documents from the comfort of your home. Apply for a loan today!