Government Takes Decisive Steps to Stop Unauthorized Use of PAN Card Details; Here is What it is Doing

Government Action Against Unauthorized PAN Data Use

The Indian Cyber Crime Coordination Centre (I4C) under the Union Home Ministry has directed several tech and fintech companies to prevent unauthorized use of PAN card details. According to reports, several financial technology companies used to create customer profiles using “PAN enrichment” service using their PAN card data. This data was being used to sell credit products and check the information provided in application forms.

Recent government intervention has disrupted such services and many unauthorized operations have been shut down. Here are some of the key highlights of the crackdown:

Nature of Unauthorized Use: As per reports, the companies were accessing details of customers such as names, addresses, and phone numbers by linking them with PAN card numbers, which were obtained from the backend systems of the Income Tax Department.
Valuable Data: PAN card numbers, which are also linked to consumer credit scores, have become a key data for profiling customers in the financial sector.
Authorized vs. Unauthorized Services: Authorised verification services provided by the National Securities Depository Limited (NSDL) allow only a basic match, with no personal details being shared. While unauthorised services accessed sensitive information, raising questions over data privacy.

PAN Data and the DPDP Act of 2023

The Digital Personal Data Protection Act, 2023 requires companies to obtain explicit consent for access to personal data and use only authorised channels. Under the new rules:

Businesses will now have to ensure that they are following stringent data protection norms.
The government aims to eliminate unauthorised access to any government database so that the privacy of citizens is protected.

An industry expert said, “After the Supreme Court verdict on Aadhaar, the rules for access to data have been formalised, and this government action reflects the government’s commitment to protecting citizens’ sensitive personal data.”

Impact on Fintech Companies

Many industry experts have acknowledged that these restrictions may create operational challenges, but they are necessary to align companies with data protection rules. Consumer lending platforms, loan sourcing channels, direct sales agents and credit aggregators that relied on unauthorised PAN data use will now be under strict supervision.

Operational Adjustments: Many companies will have to restructure their data processes, as unauthorised PAN data access is no longer possible.
Increased Compliance Costs: Compliance costs may also increase for companies in adopting these changes.

Future implications

This strict action on unauthorised use of PAN card details shows the seriousness the government takes on data privacy. As the DPDP Act 2023 comes into full effect, businesses will have to become accountable and secure with higher standards. Experts believe that these measures will create a more secure system for handling citizens’ personal data in a safe manner and will benefit both the public and companies.

The government is focused on authorized access to PAN details and compliance with data protection norms to protect citizens’ information from unauthorized use and establish a transparent digital environment.