Loan Defaulters Using Your PAN: What to Do Next

PAN Misuse for Loans: A Step-by-Step Guide to Resolution

Problem: PAN misuse for loans is a growing concern, with fraudsters using leaked data, forged documents, and lax verification to obtain personal loans, buy-now-pay-later credit, and credit cards.

Resolution: The Indian system allows individuals to rectify this issue, but it requires a methodical approach.

Step 1: Confirm the Loan

Read also: Correcting Credit Score Errors: A Guide to Ensuring Accurate CIBIL Reports and Optimal Loan Eligibility

• Pull credit reports from CIBIL, Experian, Equifax, and CRIF High Mark to identify unfamiliar loans or credit cards.
• Look for small-ticket loans or digital credit lines, as fraudsters often start with these.
• If the loan appears across multiple bureaus, it confirms active reporting by a lender.

Step 2: Inform the Lender

• Contact the lender in writing, stating that the loan was fraudulently taken using your PAN without consent.
• Request the loan to be marked as disputed due to identity theft and ask for copies of the application documents used.

Step 3: File a Police Complaint

Read also: Missing a Single EMI Payment Can Adversely Impact Credit Profile

• File a complaint for identity theft and financial fraud, mentioning PAN misuse specifically.
• This document becomes your strongest defence in case the issue escalates to legal notices or recovery action.

Step 4: Raise a Dispute with Credit Bureaus

• Submit disputes online, attaching your written complaint to the lender and the police complaint number.
• Ask for the loan to be flagged as "under dispute due to fraud" to prevent further damage to your credit profile.

Step 5: Do Not Pay the EMI

• Avoid paying even a single EMI, as it weakens your claim that the loan is fraudulent.
• Focus on documentation and dispute resolution instead.

Step 6: Escalate if Necessary

• If the lender delays or refuses to respond, escalate the complaint to the lender's grievance cell, the banking ombudsman, or RBI's CMS portal.
• Keep credit bureaus updated with proof of escalation.

Step 7: Lock Down Your PAN and Credit Profile

• Register for credit freeze or credit alert services with bureaus to prevent new loan issuance without verification.
• Monitor your credit report every few months for fresh enquiries.

Resolution Timeline: In straightforward cases, fraudulent loans can be removed from your credit report within two to three months. Complex cases may take longer, but consistency and documented communication usually work.