Nithin Kamath, Founder and CEO, , blames the pressure to grow for the poor identity checks implemented by lending platforms. In a series of tweets, Kamath links this lack of infrastructure to the rise of online financial fraud.
"With the rise of online loan platforms, online identity frauds have skyrocketed," he said. "These platforms tend to have poor checks when onboarding, given the competitive landscape and pressure to show fast user growth."
Kamath described the issue as poor standards when it came to in-person identity verification.
E-KYC is very simple to do today. PAN cards can be referenced through the income tax database, proof of address can be checked through Digilocker, and bank details can be verified using penny drop facilities.
However, because all these E-KYC requirements are so easily verified, Kamath insinuates the vulnerable lending platforms are overlooking an important requirement. Without an in-person verification, even if it's done digitally via someone holding their identity card next to their face, it's impossible to check all the details submitted through e-KYC actually belong to the person submitting the details!
"Live in-person verification (IPV) to check if the person opening the account & details being used are of the same person — the most important step to stop identity thefts," says Kamath.
Thus, people can open accounts and more with someone else's details. This means, when the lender comes looking for his money, the people on the hook are those whose financial details have been stolen to take a loan out in the first place!
Kamath suggests a couple of easy solutions to track your own online financial identity so you are aware of whether anyone is trying to steal your identity. It may make sense to go through those details to protect yourself in an increasingly digital age.
Edited by Suman Singh