The successful collaborations of the Securities and Exchange Commission of Pakistan (SECP) with Google, the Pakistan Telecommunication Authority (PTA), and the Federal Investigation Agency (FIA) resulted in the shutdown of illegal loan apps in Pakistan.
According to the SECP’s new annual report (2022-23), the SECP placed specific emphasis on addressing complaints and regulatory gaps associated with digital lending apps.
Successful collaborations of SECP with Google, PTA, and FIA resulted in the shutdown of illegal loan apps. Further, digital lending standards were also implemented to uphold fair business practices for Non-Banking Finance Companies (NBFCs). Additionally, SECP revitalized its investor education program ‘Jamapunji’ to raise awareness among the public about their rights as financial consumers.
In line with Circular No. 15 of 2022, the SECP has imposed a ban on licensed NBFCs from collaborating or integrating with digital lending applications that haven’t been approved by the SECP. This measure is aimed at ensuring compliance, transparency, and regulatory oversight, within the digital lending space.
To safeguard the interests of stakeholders, the PRDD-SCD has enforced a prohibition on licensed NBFCs from engaging in any form of collaboration or integration with digital lending applications that lack regulatory approval. This measure aims to ensure compliance and regulatory oversight in the digital lending space, promoting transparency and safeguarding the interests of stakeholders involved, SECP said.
The SECP has successfully collaborated with Google in developing a Standard Operating Procedure for getting prior approval of the Commission before providing access to lending applications on the Google Play Store. This step ensures that only approved digital lending platforms are accessible to consumers, SECP maintained.
The country-specific licensing documentation for digital lenders to prove their ability to provide or facilitate personal loans shall contribute to safeguarding the interests of consumers. Moreover, Google has restricted personal loan Apps targeting users in Pakistan from accessing user contacts or photos. In this regard, the first two Lending Apps have been approved during the year under clause 6(1) of the Circular No. 15 of 2022.
Taking cognizance of the rising number of complaints against digital lending apps, SECP introduced various measures to ensure equitable and fair business practices by lending NBFCs through the introduction of a comprehensive set of digital lending standards.
Moreover, to counter the spread of illegal apps, SECP collaborated with Google to develop a Standard Operating Procedure (white List), and now prior approval of the SECP is required by lending apps before being given access to the Google Play Store. This measure will curtail the spread of unlicensed digital lending platforms in Pakistan, the report added.
