How I became a victim of identity theft and loan fraud

Published: January 12, 2024 at 6:00 am

I am a 36-year-old mechanical engineer working in a multinational company. I have been a Facebook group Asan Ideas for Wealth member for over two years. I want to share the story of the personal loan fraud that happened to me. The idea of sharing this is to make everyone aware of the risks.

About this article: We have started a new category, reader experience, to highlight the ordeal of readers subject to frauds, scams or any money management difficulty resulting in excessive paper, money or time spent. It can also be a smart money-saving move or any such positive experience.  All contributions will be anonymous. We have added a few old articles in this category. The archive can be accessed from the above link.

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In 2022, I applied for a Home loan and a Car loan. I had only considered the Bank of Baroda and SBI as two options and had approached bank agents while applying for this loan.

Fast forward to 2023, one evening at the office, I received a legal notice from IDFC First Bank for dishonouring the cheque related to a personal loan of INR 50000. The cheques were issued from the Canara Bank savings account in my name. The cheque got bounced due to insufficient balance in the account.

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The same day I checked the CIBIL report, I noticed three personal loans in my name (INR 5 lac from Piramal Finance, INR 50K from IDFC First Bank, and INR 5K from FINC Finance). 

Upon visiting IDFC First Bank, I learned this digital loan is available online. The fraudster had used a forged PAN card and an Adhar card to avail of this loan with my name, DOB, PAN and Aadhar number, but a different photo and address. The registered mobile number against this loan was also taken against my name using these documents as KYC.

I realized that my KYC documents were misused during my earlier loan applications for applying to these loans. I could only get some information for the other two cases as they were taken through digital lending apps.

The fraudster used two ways to get these loans approved –

  1. In cases where eKYC authentication was mandatory and could not be bypassed, the loan was authenticated based on a different Aadhar number linked to the mobile number appearing in the bank records. The loan with INR 50K was applied through this way.
  2. In other cases, the eKYC was bypassed, and forged original copies of PAN and Aadhar were used for the application. The savings account in Canara Bank, the mobile sim and all the other loans were availed in this way.

I reached the police station requesting to file an FIR and also raised a cyber crime complaint, which was transferred to the local police station. However, the local police refused to file the FIR. As per them, this FIR needs to be filed by the bank. I got an acknowledgement of the police complaint from the station through some acquaintance. 

I raised official complaints through the official grievance channel, sent my KYC details for validation, and waited for the official Turnaround time. Except for Piramal Finance, who investigated the case and removed the loan merely based on one email, all other banks / NBFCs tried to delay the responses and buy time.

Since there was no resolution, I finally had to raise an RBI ombudsman case, and within seven days, I received an answer from all these banks.

  1. IDFC and FINC Finance closed the loans showing against my name.
  2. Canara Bank confirmed that the savings account was created based on the applicant’s original copies of Aadhar and PAN. However, no eKYC authentication was done.

A few mistakes which I should have avoided –

  1. The KYC documents for my home loan and Car loan applications were shared with the agents. It is better to submit the documents directly to the branch. Also, using masked Aadhar for the initial loan application is recommended.
  2. Few people say it is recommended to write down the purpose of the KYC document. However, it is not foolproof, as it still reveals your KYC details and makes you vulnerable.
  3. Proper care needs to be taken while handling PAN cards and Aadhar cards. Avoid printing the scanned copies or taking copies of these documents from outside shops. It is better to print the copies on a private printer.
  4. We can avoid using PAN and Aadhar cards as proof of identity and use other documents like voting cards or driving less.
  5. Lastly, it is recommended that the CIBIL report be checked regularly to identify any discrepancies.
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Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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