Personal Loan

What Are The KYC Documents Required For Personal Loan


A personal loan is given by a bank to any person who requires funds. This money is then repaid to the bank within an agreed timeline and interest rate. The actual sum borrowed is known as the principal amount, and the additional amount to be paid over time is called the interest.

The interest rate is a percentage of the principal amount that is payable on the loan over time. This rate can vary anywhere from 7% to 50%. The interest rate varies from bank to bank and can also change over time. Let’s look at an example to understand this better.

Suppose X has applied for a loan of Rs. 10 lakh at an annual interest rate of 7%. This means that at the end of one year, X has to repay Rs. 10.7 lakh. The interest is accrued every year.

A personal loan is usually not very difficult to acquire. It also does not need any collateral or security, as is the case with other kinds of loans. A simple requirement for a personal loan is documentation. This is known as the KYC documentation. Some banks also have a pre-approval loan system that requires less documentation. This means that the bank has already looked at your viability as a candidate and is comfortable granting you a loan.

However, when applying for a personal loan, there are certain key documents that every lender needs. This article looks at these KYC documents and additional documents required to obtain a personal loan. It is important to have these documents in place to avoid any delays or rejection of your loan application.

What Documents Are Required for a Personal Loan?

Although the documentation required also depends on the bank you are engaging with, there are certain basic documents that you must be prepared with, regardless of the bank.

The purpose of these documents is to identify the person, understand their requirements, and determine their credibility for repayment of the loan. Since a personal loan does not need security, a bank uses these documents to also determine the risk of granting a personal loan.

This means that the bank will check how likely and able a person will be to repay the principal amount as well as the interest. A bank also checks the overall profile of a person to fix the interest rate.

KYC documents assist the bank in making these key decisions. It is also worth noting that the KYC documents differ based on whether a person is a salaried employee or self-employed. Let’s first understand the meaning of these two terms.

  • Salaried employee – A salaried employee is a person who receives a salary from a company or organisation in exchange for professional services. This means that they have an employer to whom they are accountable and contractually bound.
  • Self-employed – A self-employed individual is also sometimes referred to as a “freelancer.” They do not work on a salary basis and are not considered full-time employees of a company for tax purposes, employee insurance, increments, and other purposes.

Due to the different nature of these two kinds of employment, there is also a difference in the documentation needed. However, for KYC purposes, there are mainly two kinds of documentation required:

  • Identity proof
  • Address proof

Most banks consider the following documents to be valid for KYC purposes:

Identity Proof

Identify proof is needed to determine the legitimacy of the person seeking a loan and usually needs to be a photo ID. It is also important to determine the citizenship of a person to avoid cases of fleeing. In India, banks consider the following to be valid identity proofs:

  • Adhaar Card
  • PAN Card
  • Passport
  • Driver’s licence
  • Voter ID card

Address Proof

Banks also require proof of residence. This means that the most updated residence proof must be submitted as part of your KYC documents. The acceptable documents for this purpose are:

  • Passport
  • Ration Card
  • Registered Sale Agreement
  • Registered rent agreement
  • Adhaar card
  • Utility bills such as the electricity bill, water bill, and gas bill
  • Driving licence

These are the KYC documents that are required for a personal loan. It is important to note that for documents such as utility bills and rent agreements, banks require up-to-date documents that are no more than 3–4 months old.

Additional Documents

So far, we have looked at the KYC documents required for a personal loan. However, based on the nature of employment (salaried or self-employed), some additional documents need to be submitted along with the loan application.

Salaried employees

For salaried employees, in addition to the KYC documents, banks require the following:

  • 2-3 month bank statement displaying credited salary
  • Salary slips for the latest 2-3 months
  • Income Tax Returns or Form 16


  • Audited financial statements for the past 2 years (profit and loss statement, balance sheet, etc.)
  • Income tax returns for the past 2 years
  • Proof of registration in the case of business ownership

The Significance of KYC Documents

KYC documents are mandatory to obtain any kind of loan. However, an original copy of these documents need not be submitted. A self-attested photocopy of these documents is sufficient. Self-attested simply means that a photocopied version must be signed by the applicant before submitting it. However, it is always good to have the original copies handy in case further verification is needed.

Proper documentation will also help avoid delays in the verification process. This would allow the bank to speed up the application and disburse the loan without having to request further documents. Nowadays, personal loans can also be applied for online, making it easier to obtain one.

This article looked at the various KYC documents required for a personal loan. However, these are just the basic documents. Several factors can affect the documents needed, such as the loan amount and credit score of the applicant. Some banks also have their own policy requirements and may need additional documentation, such as previous or existing loan applications, professional degree certification, signature proof, and so on. However, the most important documents are the KYC documents, and you must be prepared with those before filling out your personal loan application.

Found this article interesting? Head over to Piramal Finance to know more about personal loans and overall financial well-being.