Hi everyone,  

Welcome to the 133rd edition of The Pattern, a weekly where we dive into the latest from the world of economy, technology and finance. Let’s get started. 

That’s all for this week. I will see you next week. As always, I’ll leave some reading recommendations below.  

Government of India Initiates PAN 2.0  

Earlier this week, on my way to the office, my phone buzzed with a notification for a software update. And just as I was about to clear the notification, I saw another pop-up from an e-paper. It was about PAN 2.0 , the upgraded version of the PAN card.   

 On November 25, Union Minister Ashwini Vaishnaw made the announcement. He said, "PAN card is part of our life which is important for the middle class and small business, it has been highly upgraded, and PAN 2.0 has been approved today. The existing system will be upgraded, and the digital backbone will be brought in a new way."  

 Let's see why this upgrade is crucial for us. 

  What's new with PAN 2.0?   

With PAN 2.0, the familiar 10-digit verification number now comes with a QR code. This little addition makes things so much easier – scanning is faster, verifying data is more accurate, and businesses can onboard customers quickly. 

 According to the Central Board of Direct Taxes, there are about 780 million PAN cards and 7.328 million TANs in use. PAN 2.0 is designed to bring all these services into the digital age, making the entire process quicker and much more secure. It's not just about adding a QR code – this upgrade will also merge TAN services, make PAN validation online, and simplify how people apply for, update, or correct their PAN details. In simple words, things are about to get much faster and more secure. 

  Why is PAN 2.0 needed for the hour?  

The old PAN system was outdated and created serious risks for protecting personal data. Identity theft and fraudulent loans were major concerns because stolen PAN details could allow someone to impersonate another person. The system was not only insecure but also inefficient. 

Manual checks for customer identification and too much paperwork cause delays for businesses, especially in banking and finance. These delays make it hard to onboard customers quickly. Inaccurate and inconsistent PAN data cause problems when customer information is processed. It was also concerning that PAN data is not the same across different platforms, leading to mistakes and further delays. 

KYC fraud became a major concern, with fraudsters using stolen PAN details to create fake accounts and carrying out fraudulent transactions. This in a way damaged the reputation of financial institutions. Banks faced penalties for failing to properly onboard customers. This allowed scammers to take advantage of the system for illegal activities, including money laundering. As a result, the credibility of legitimate businesses suffered.  

That's why an upgrade was necessary. 

What does PAN 2.0 bring to the table?  

PAN 2.0 is designed to fix a lot of ongoing issues by introducing helpful features like QR codes for faster data verification. This means businesses can onboard customers more quickly and easily. Plus, with paperless applications, everything can be handled digitally, saving time and resources. PAN 2.0 also integrates with other systems, making it easier for businesses to stay compliant with tax rules and avoid penalties. And with a centralized portal for all PAN-related services, users can access and manage their information in one place, improving both accuracy and the overall experience. 

FinTech companies will benefit greatly from these upgrades. The process will be faster and more efficient, meaning quicker customer onboarding and easier compliance. This helps businesses save time, lower operational costs, and keep data accurate. Overall, this improves operational efficiency. 

Sanjeev Mehta, former MD at Standard Chartered Bank said, "The project will enable a single source of truth and a unified identity for consumers. With a single interface and integration, it eliminates the complexities of maintaining multiple systems. This has been a long-standing demand from the industry."  

  But here's the catch...  

While PAN 2.0 brings exciting improvements, some limitations still need to be addressed. Even though the government has allocated ₹1,435 crore for the PAN 2.0 project, it's not mandatory for the existing cardholders to upgrade to the new format. Existing PAN cardholders don't need to apply for a new card, which means the risk of misuse and faulty verification still lingers. While the upgrades are a step in the right direction, until they're implemented across the board, we won't see the full benefits of this transition to a more secure and efficient system. 

Reading List:  

• India’s PAN 2.0 Project: All You Need to Know  

• PAN 2.0 project to reduce costs for fintech companies: experts  

• India orders fintech firms to halt unauthorised use of PAN cards  

• Pan 2.0: Top 8 things to know — Check what are the upgraded features, who should apply, and other details here  

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on Twitter here and follow FinBox on LinkedIn to always get all updates. 

Cheers, 

Mayank  

All opinions expressed are my own and do not necessarily reflect the views of FinBox or its promoters.