PAN As Common ID Document – Union Budget FY23

With the recent developments in digitizing processes, the government proposed the use of the Permanent Account Number or PAN as common ID. This move aims to assist regulators in data collection & processing, while also making it easier for companies to verify their clients’ details.

Business establishments that utilize digital systems from government agencies for various purposes will be able to use PAN cards as a standard ID document to conduct verification.

The government included this proposal in the Union Budget for Fiscal Year 2023, as a way to improve the ease of doing business, which can be especially beneficial for firms in the BFSI sector.

The proposition of PAN as a uniform digital identity also helps streamline & optimize the KYC process substantially, which is an integral component of customer onboarding in banks, investment & insurance firms.

Single ID For Business Verification 

PAN is a widely recognized ID document in India & is extensively used for various transactions, both financial & non-financial, across the country. Using PAN as a common ID can improve the way multiple processes take place, streamline them & benefit businesses in many industries.

Permanent Account Number or PAN as a common business ID presents benefits for businesses in many ways like lowering the risk of fraud, streamlining the verification process, guaranteeing compliance with regulatory requirements, & lowering the cost of KYB verification.

Using PAN as a standard ID for business transactions also helps companies provide a better onboarding experience for corporate clients.

Why Is a Common Business Identifier Needed?

According to case studies conducted by the World Bank, implementing a common business identifier –

  • Lowers the time it takes to register businesses, sometimes to just 2 days
  • Decreases the administrative burden placed on businesses due to time spent dealing with various government entities
  • Improves customer service metrics as businesses coould devote more resources to high-impact areas
  • Increases government efficiency in terms of disbursing services, quality of data stored, and data management processes implemented
  • Lowers the cost of interacting with government agencies for businesses, compliance costs for businesses, and even administrative costs for governments

Implementing a common business identifier will also help streamline the KYB and due diligence process for businesses when onboarding new partners or corporate clients. When combined with the recent proposal to expand the scope of DigiLocker, PAN as a common business ID will enable hassle-free business documentation.

The proposed “Entity DigiLocker” will be capable of storing business documents and IDs of MSMEs and large enterprises. Businesses will be able to produce Officially Valid Documents (OVDs) for instant verification or due diligence purposes using DigiLocker. The digital vault will also enable enterprises, regulators, and other government entities to quickly retrieve business documents for purposes of KYB, disbursing services, risk management, and onboarding.

PAN verification is among the most vital steps in enabling seamless digital KYB verification.

PAN Verification In The KYB Process

PAN verification is a Know Your Business (KYB) process that involves validating the authenticity of a company’s Permanent Account Number (PAN) with the appropriate government authorities.

PAN verification is an important part of the KYB process because it allows businesses to establish their reliability and credibility. And with PAN as single business ID has the potential to expedite the business verification procedure multifold.

Businesses have to submit their PAN alongside other relevant documents to the verifying entity as part of the KYB process. The verifying entity then compares the PAN information to the Income Tax department’s database to ensure that the PAN is valid & that the business is registered.

Companies can carry out PAN verification for KYB online on KYB verification platforms like SignDesk.

PAN Verification For KYB – Process Flow

The process of PAN verification for business entities involves the following steps:

  • The business submits PAN details, along with other relevant documents, for verification.
  • A request is placed to check the PAN against the Income Tax department’s database.
  • The PAN details provided by the business are checked against the Income Tax department’s database to verify the authenticity & ensure the PAN details are valid.
  • If the PAN details are found to be correct and valid, the business is considered to have passed the KYB PAN verification stage.

PAN Verification API

PAN card verification via the PAN verification API is a quick & easy way for companies to verify the authenticity of PAN & the accuracy of PAN details furnished by their business partners.

The API enables firms to quickly & accurately verify PAN since it requires minimal manual intervention. Businesses in any sector can seamlessly integrate the API into their ID verification process to validate PAN details.

PAN Verification Using API – How It Works 

Verifying PAN through PAN verification API typically happens in this manner:

  1. The company integrates the PAN verification API into its business verification system.
  2. The company submits the PAN information for the corporate client or business partner entity that needs to be verified.
  3. The system sends a request to the PAN verification API & submits the PAN details to be verified.
  4. The PAN verification API responds to the request & retrieves the necessary information from the Income Tax department’s database.
  5. The API verifies the authenticity & accuracy of the PAN details provided by the business by verifying them against the details retrieved from the ITD (Income Tax Database).
  6. The API communicates the verification results to the company’s verification system, enabling the firm to easily accept or reject the business partnership.

PAN verification APIs help businesses conduct hassle-free digital KYB, comply with due diligence procedures, and enable accelerated digital onboarding.

SignDesk’s PAN verification API leverages OCR, face match, and smart verification techniques to instantly scan, extract and verify PAN details from business IDs.

Why Do Firms Verify PAN? 

The PAN verification process ascertains the veracity of the PAN card information furnished by the customer. Using a common ID verification system enables BFSI businesses in easily verifying the PAN of business clients or individuals & analyze factors like:

  • Checking PAN status, i.e., whether the PAN is active, deactivated, deleted, or not present in the database.
  • Checking PAN genuinity i.e., whether the PAN card is authentic or fake.
  • Name of the PAN holder.
  • Name printed on the PAN card.
  • And whether the PAN card has been previously updated.

PAN, as common ID document for verification, assists bankers, insurers & securities intermediaries in procuring their customers’ identification information for due diligence purposes faster & more efficiently.

The government’s FY23 Union Budget proposal of PAN card as a singular ID document also helps these businesses take their customer verification process online using video-Based KYC verification.

PAN Verification For Banks & NBFCs

Banks & non-banking financial institutions need to verify the information provided by new customers before carrying out business with them. Before disbursing loans or opening up accounts to new customers, these financial institutions need to verify if the PAN card details submitted by the customer are accurate.

Video-based Customer Identification Process or VCIP is a seamless & secure alternative to the typical face-to-face CIP & enables bankers to verify customers’ PAN details online. On SignDesk, banks & NBFCs can use an end-to-end encrypted VCIP solution to record & digitally verify customers’ PAN data in real-time.

Video-Based Customer Identification Process Flow

VCIP takes place as follows:

  •  The customer logs in to SignDesk’s video KYC portal to get on the video call & uploads an image of his PAN card.
  •  SignDesk extracts key data from the PAN using OCR & cutting-edge data extraction techniques.
  •  We verify the PAN card details against reliable databases to ensure it is authentic & spot fake IDs instantly.
  • We leverage smart Machine Learning techniques to confirm that the PAN card belongs to the person on the call.
  • Profile filters are used to remove violators from the VCIP in case they are detected.
  •  We use geo-tagging to determine the location where the customer is present during VCIP.
  • Liveness checks are made to ensure the customer’s presence during the video call. & counter spoofs & deep fakes.
  • The video-based customer identification procedure is complete & the customer can avail of banking products & services if his/her PAN details are accurate.

PAN Verification For Insurance Companies

Insurance providers are required to verify PAN details whenever they want to establish or continue an account-based relationship with a customer or for any other insurance service. In addition, they have to also carry out PAN verification of insurance policy beneficiaries.

For this purpose, they can utilize a Video Based Identification Process for insurance businesses, more commonly known as VBIP. SignDesk’s automated VBIP solution helps insurers to obtain customer identification information & conduct PAN card verification online over secure, encrypted & recorded video calls. 

Video Based Identification Process Flow

VBIP takes place in this manner:

  • The insurance official invites the customer for the video-based identification procedure.
  • The customer uploads his PAN card photograph or scanned copy for authentication via Aadhaar eSign.
  • The insurance representative initiates an audio-visual interaction with the customer while recording the video.
  • The official captures live images of the customer & his PAN card.
  • The images are matched with the photo on the PAN card using Machine Learning techniques.
  • AI & OCR technologies extract image data & verify it against standard databases for authenticity.
  • Geo-tagging is utilized to establish the customer’s live location.
  • The video-based identification process is complete & if the PAN details are correct, the customer can avail of insurance services.

PAN Verification For Securities Intermediaries

Securities intermediaries need to perform KYC before carrying out business with any new investor. In addition, they have to conduct KYC on an ongoing basis depending on the level of risk associated with the customer & also when they make additional investments.

These checks help them identify & address any significant threats or malicious transactions. For this purpose, they can utilize Video In-Person Verification or VIPV & verify ID documents like PAN cards of investors. 

Video In-Person Verification Process Flow

VIPV occurs as follows:

  • An authorized official invites the investor for VIPV & commences it after the investor consents to the terms & conditions.
  • The investor uploads his PAN card for verification.
  • The investor’s & his PAN card’s images are captured & verified, or the PAN card is validated via OTP.
  • Facial matching & geo-tagging are performed to verify & confirm the investor’s location during VIPV.
  • The official conducts a question-driven interaction to perform the investor’s liveness check.
  • The verification is complete & the official can approve or reject the investor based on it.

PAN Verification In The KYB Process

PAN verification is a Know Your Business (KYB) process that involves validating the authenticity of a company’s Permanent Account Number (PAN) with the appropriate government authorities.

PAN verification is an important part of the KYB process because it allows businesses to establish their reliability and credibility. And with PAN as single business ID has the potential to expedite the business verification procedure multifold.

Businesses have to submit their PAN alongside other relevant documents to the verifying entity as part of the KYB process. The verifying entity then compares the PAN information to the Income Tax department’s database to ensure that the PAN is valid & that the business is registered.

Companies can carry out PAN verification for KYB online on KYB verification platforms like SignDesk.

PAN Verification For KYB – Process Flow

The process of PAN verification for business entities involves the following steps:

  1. The business submits PAN details, along with other relevant documents, for verification.
  2. A request is placed to check the PAN against the Income Tax department’s database.
  3. The PAN details provided by the business are checked against the Income Tax department’s database to verify the authenticity & ensure the PAN details are valid.
  4. If the PAN details are found to be correct and valid, the business is considered to have passed the KYB PAN verification stage.

PAN Verification API

PAN card verification via the PAN verification API is a quick & easy way for companies to verify the authenticity of PAN & the accuracy of PAN details furnished by their customers or business partners.

The API enables firms to quickly & accurately verify PAN since it requires minimal manual intervention. Businesses in any sector can seamlessly integrate the API into their ID verification process to validate their customers’ PAN details.

PAN Verification Using API – How It Works

Verifying PAN through PAN verification API typically happens in this manner:

  1. The company integrates the PAN verification API into its customer or business verification system.
  2. The company submits the PAN information for the individual or entity that needs to be verified.
  3. The system sends a request to the PAN verification API & submits the PAN details that need to be verified.
  4. The PAN verification API responds to the request & retrieves the necessary information from the Income Tax department’s database.
  5. The API verifies the authenticity & accuracy of the PAN details provided by the business by verifying them against the details retrieved from the database.
  6. The API communicates the verification results to the company’s verification system, enabling the firm to easily accept or reject the customer/business partnership.

What Is The Importance of PAN Card Verification? 

PAN card verification is an integral process for many businesses, especially those operating in the banking, financial services & insurance sector. PAN verification is important for these reasons:

  • Finance Fraud Prevention: Businesses can significantly reduce the risk of fraudulent transactions by ensuring that the person claiming to be the PAN card holder is actually the rightful owner of the card.

Verifying customers’ PAN card details can assist businesses in detecting & preventing fraud & financial crime, such as money laundering & identity theft. 

  • Improved Compliance: PAN card verification is requisite for many financial transactions, including opening a bank account, buying insurance & investing in financial products. 

Businesses can ensure they stay compliant with regulatory & legal requirements by verifying their customer’s PAN details when they carry out these transactions. 

  • Enhanced Customer Experience: PAN card verification using remotely implementable procedures like VCIP, VBIP & VIPV simplifies customer journeys.

Companies can verify potential customers online & offer them improved accessibility to their products & services. 

  • Better Risk Management: In the BFSI sector, PAN verification acts as a valuable tool for controlling & mitigating risk. 

Businesses can assess the risk associated with a specific individual or company by verifying their PAN details &  implementing proper measures to mitigate that risk. 

Verify PAN With SignDesk’s Robust KYC Verification Solution

PAN verification is an essential component of KYC processes as it assists BFSI businesses in identifying their customers, along with their income sources & status. Knowing them helps these businesses determine the customer’s creditworthiness & helps them lower the likelihood of financial fraud due to onboarding the particular customer.

PAN card verification is a critical process for BFSI firms because it assists them in identifying their customers, complying with legal & industry regulations, assessing risk & reducing the risk of fraud & financial crime.

SignDesk’s state-of-the-art video KYC platform is designed to enable BFSI companies to conduct PAN verification and pan aadhaar link verification of their customers in an online environment.

Our PAN verification solutions use cutting-edge compliance technology to help lower customer verification costs, & reduce KYC drop-offs & TAT. The procedure also entails an audit trail to record the entire transaction for future reference.

SignDesk’s VBIP, VCIP, VIPV, & API-based PAN verification solutions protect your business against fraud & allow for easy customer verification & onboarding. Schedule a free demo with us to learn how online PAN verification via video KYC can help you speed up your customer onboarding process.