Getting a good education is one of the most important things for every individual around the globe today. A good education helps people not only achieve a good degree but also excel in their career. But the fees charged by a number of universities is too high for many students and thus, they apply for an education loan from banks. Earlier as part of the documentation process, banks did not ask for a PAN Card but at present most Indian Banks have made it compulsory for students and their parents or co- borrowers to submit a PAN Card when they apply for an education loan with them.
Reasons for mandatory submission of PAN Card:
Easy to assess income – Every person who holds an account with any bank in India has to have a PAN Card (Permanent Account Number). Even for them to receive their salary or professional fees, they have to provide this particular Number. Since, it contains all the details of a person’s financial status, this card helps banks in assessing the applicant’s income and the income of their parents, guardian or co- borrower. It also prevents the applicant or his or her guardian from providing wrong income details to the bank.
Easy to trace borrowers – One of the major reasons why banks have made submitting of PAN Card compulsory is due to the increasing number of defaulters. Some students take an education loan from banks for the purpose of higher education in India or abroad and then default on their loans. After they pass from their colleges or universities, it becomes extremely difficult for banks to get in touch with them. If borrowers submit their PAN Card details to the banks, then it will become very easy for banks to trace them. If borrowers are aware of the fact that the banks will find them, they will try their best to pay off their entire loan on time.
Also, if the borrowers have submitted the PAN Card details while applying for an education loan and then defaulted, it will be very difficult for them to get another loan from any bank.