https://arab.news/jx4x8
- Issue came to light in July when a Pakistani man took his life after receiving threats from illegal loan apps
- SECP advises borrowers to obtain loans only from licensed Non-Banking Financial Companies (NBFCS)
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) said on Wednesday it had removed 120 illegal personal loan apps from Google and Apple stores to safeguard people from falling into “debt traps.”
Pakistan has been cracking down on loan apps involved in extorting money through threats and blackmail since July when the death by suicide of a 40-year-old man from Rawalpindi made headlines in the country. The man was unable to return the money he borrowed from loan apps, with his wife telling police threats and blackmail compelled her husband to take his life.
While Pakistan has reported a surge in the number of people personal finance apps in the last two years, the boom has led to a surge in complaints about illegal lenders that routinely abuse customers’ data and use aggressive recovery tactics including threats and blackmail.
“In order to safeguard the public from falling into debt traps of illegal loan apps, the Securities and Exchange Commission of Pakistan (SECP), in coordination with Google, Apple, and the PTA, has ensured the removal of 120 illegal Loan apps that were previously available at Google and Apple Stores,” the SECP said in a press release.
The finance regulator said illegal personal loan apps have recently raised concerns of mis-selling, data privacy violations, and coercive recovery tactics. The SECP said it had identified 120 “unlawfully running apps” through complaints and surveillance, adding that it had referred them to the Federal Investigation Agency (FIA) for further action.
“As a result of SECP’s efforts and continuous engagement, Google has introduced Pakistan’s Personal Loan App Policy, according to which Google only allows SECP-approved Personal Loan Apps for placement on its Google Play Store,” it added.
The regulator advised borrowers to obtain loans only from licensed Non-Banking Financial Companies (NBFCs).
Pakistan is seeing a rise in the number of users seeking loans from personal finance apps as the country continues to suffer from staggering inflation. Pakistan reported inflation at 28.3 percent in July while in May, the inflation rate jumped to a record high of 38 percent.
Reflecting a jump in smartphone use, the number of Pakistanis using personal finance apps more than doubled to 19 percent in 2022 from two years earlier, boosting low rates of financial inclusion, according to a survey earlier this year by Karandaaz Pakistan, a nonprofit.