SECP is Working With Google and Apple to Take Down Illegal Loan Apps

At the request of the Securities and Exchange Commission of Pakistan (SECP), Google has initiated a review of its policies to limit its platforms to licensed digital lending companies only.

SECP officials informed select journalists at the SECP Headquarters that the commission has been engaged in active coordination with Google and Apple for the removal of unauthorized loan apps offered by digital lending companies.

A  total of 58 unauthorized apps had been reported to Google for removal during January 2023. At the same time, one such app has been reported to Apple.

In response to SECP’s request for the future listing of personal loan apps for Pakistani users, Google has initiated a review of its policies. Google has been asked to limit its platforms to licensed entities only, in accordance with its policies for India, the Philippines, Kenya, Nigeria, and other countries.

As of October 31, 2022, these licensed digital entities had disbursed Rs. 60.13 billion in 4,254,201 loans, resulting into an average loan size of Rs. 14,135 per loan, SECP data added.

Officials further informed that since July 2022, a total of 108 complaints have been received against unauthorized apps of digital lending companies. In this regard, besides liaising with the local regulators concerned (i.e., Pakistan Telecommunication Authority (PTA), Federal Investigation Agency (FIA), and the State Bank of Pakistan (SBP), SECP has also liaised with Google and Apple for the removal of unauthorized apps.

When asked about an increase in the number of lending applications being registered with the SECP, sources stated that some applications for grant of license as microfinance companies are in process.

Moreover, licensed non-banking finance companies (NBFCs) can now operate only one mobile application. In addition, all NBFCs operating mobile apps or planning to launch a new app are required to submit a certificate from PTA-approved cyber security audit firms regarding compliance with all requirements of SECP’s Circular 15 of 2022.

In response to growing concerns about mis-selling, privacy violations, and forced recovery tactics by licensed digital lending NBFCs, the SECP has issued Circular 15 to set digital lending standards applicable on Non-Banking Finance Companies (NBFCs) undertaking lending activities through digital channels/ mobile applications (Apps).

Under the circular, the requirements stipulate minimum mandatory disclosures and provision of Key Fact Statement (KFS), before loan disbursement to the borrower.

To discourage non-licensed digital lenders, the licensed digital lender shall be required to disclose its full corporate name and licensing status on its lending platform(s)/App(s), and ensure that any advertisement and publication shall be fair and not contain misleading information.

In addition, SECP has also specified a comprehensive grievance redressal mechanism over and above the current NBFC grievance redressal framework.

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