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Kolkata: Personal loans do not involve any collateral but involves some paperwork. It is understandable since the lender sanctions/disburses the amount of money solely on the basis of its assessment of creditworthiness of the applicant. In the absence of any collateral asset, the lender has no fallback option to recover the money. Therefore, it tries to procure as much information on the credit behavior and as possible and the need for documentation is important from this perspective. The main documents that one should keep handy to apply for a personal loan relate to identity proof, address proof, income proof etc.

A variety of documents

The following documents will be required by the representatives of almost all banks, private sector or public.

Documentation for identity verification: These are the commonly acceptable documents required in different activities such as Aadhaar card, passport, driver’s license, voter ID card etc.
Documentation for address verification: Similarly, documents to prove address are the common documents utilised everywhere. These are utility bills such as electricity bill, bill for water tax, or LPG connection, savings account passbook of public sector banks, house rental agreement, passport.
Proof of income for salaried persons: To prove continuous income, lenders of ten ask for a minimum of three months salary slips.
Bank statement: Most lenders ask for bank statements for the past three to six month. This can vary from lender to lender, but usually statements for more than six months is not asked for.
Passport-sized photographs of applicant: Almost all lenders ask for two copies of passport-sized photographs.

The point to note is that if the applicant is self-employed and not a salaried person, he/she won’t have salary slips. In their place, the lender will ask for a variety of documents to prove the existence of a business or source of income. These might be audited financial statements for the two preceding years, bank statements for the six months preceding the application. The lender could also require the existence of a continuing business.