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For opening any account in a bank or a wallet, meeting the know-your-customer guidelines are necessary. If your account is not KYC verified, you may have problems while making payments in future. Like the recent case in Paytm where many customers had not undergone KYC, and even their PAN had not been validated. In fact, there were cases where more than 100 Paytm accounts were linked with one customer’s PAN. This means there are chances that your PAN could also be misused.

Why is KYC necessary?
Under KYC, banks and other lenders demand proof of address and identity from customers before opening their account or giving them a loan. But as seen in Paytm’s case, KYC had not been done for many individuals, and there were also significant irregularities in the KYC process. KYC is a way for banks or other financial institutions to know that they can trust you. In essence, it acts as a filter.

Now, we should also understand how these irregularities can affect the customer. If someone else’s account is linked to your PAN card on a fintech or payment app, that person can use it to take digital loans. And many such cases have been reported. Two years ago, there was a case where actress Sunny Leone’s PAN card details were misused. Someone had used her PAN card details to take a loan from a digital loan app. She later claimed that the loan app also didn’t help her.

In most of these cases, people only found out about someone taking a loan using their PAN when they checked their credit history. People saw that loans were registered under their name in the CIBIL report. So, if something like this happens, not only will you be stuck in a financial crisis but your CIBIL score will also be adversely affected.

Experts say that KYC irregularities not only affect the customer but also impact the entire financial system. This leads to a loss of trust in the banking system and creates risks. All this can have an impact on financial instability and thus, the entire economy at large.

While you should be concerned, it’s also important to be vigilant to avoid any worries. So get your KYC done at the earliest and also verify the reliability of the app you are using. Keep checking your CIBIL from time to time. This way, if your PAN is misused and a loan is taken in your name, you’ll immediately catch it. Apart from this, UPI is a better and more secure payment option, so instead of depositing money in wallets or bank accounts of payment apps, you can use UPI more frequently.