Pakistan Telecommunication Authority blocks 43 unregistered lending apps

Google Play Introduces a New Screening Policy for Digital Lending Apps in Pakistan,

ISLAMABAD (Web Desk) – Following directions given by Federal Minister for Information Technology and Telecommunication (MoITT) Syed Aminul Haque, the Pakistan Telecommunication Authority (PTA) has blocked 43 digital lending apps operating without a proper licence.

The apps were criticised for their predatory lending tactics after a man committed suicide for failing to repay debt which had swelled to Rs800,000.

In the statement, the ministry said directions were issued to PTA Chairman retired Maj Gen Hafeezur Rehman to act against illegal loan apps.

Haque said ‘strict action’ had been taken against those apps which were ‘blackmailing the masses’. The minister emphasised the importance of launching an awareness campaign to prevent people from falling a victim to such fraudulent activities.

The statement further said individuals should report complaints to relevant authorities such as the PTA, the FIA Cybercrime and local police to take appropriate action against these illegal loan apps.

As per MoITT, the IT minister also made contact with the FIA with directions to take action against such elements instead of waiting for complaints.

The subject of digital lending apps falls under the jurisdiction of the Securities and Exchange Commission of Pakistan (SECP) which registers them, whereas blocking them is the purview of the State Bank and the PTA.

“The SECP has been able to block 86 illegal apps in a year with the help of Google as they are downloaded from the PlayStore,” a senior SECP official said, adding that these apps restart their business with a new name soon after being banished.

These apps also carry out extensive advertising on social media and digital platforms, allowing them to lure more unsuspecting customers.

The FIA is investigating all legal and illegal loan apps in the wake of Mahmood Masood’s death. A senior FIA official told media that the deceased had not only taken loans from lending apps but also from relatives and friends.

Meanwhile, the FIA, during its crackdown across country on illegal loaning companies, has registered 74 cases for inquiries on the complaints lodged by the affectees and registered three FIRs against the individuals and companies.

The FIA arrested 17 suspects running illegal online loan schemes from various cities and blocked 30 accounts.

FIA Director General Mohsin Hassan Butt directed all field units of the cyber crime wing to take strict action against the companies and individuals offering loans through unregistered and illegal mobile applications.

While,

Google has introduced a new policy for personal loan applications with the commitment of protecting consumers across Pakistan from fake and unregistered loan apps.

The new requirements, effective May 31, 2023, allow the Non-Banking Finance Company (NBFC) lender to publish only a single Digital Lending App (DLA). Those who attempt to publish more than one DLA will be terminated from their developer account and any other associated accounts.

Developers with personal loan apps targeting users in Pakistan must complete the Personal Loan App Declaration form and submit the necessary documentation before publishing their app. They must submit proof of approval from the Securities and Exchange Commission of Pakistan (SECP) to offer or facilitate digital lending services in Pakistan.

Google Play will also request additional information or documents relating to loan app compliance with the applicable regulatory and licensing requirements.
Personal loan apps operating in Pakistan without proper declaration and license attribution will be removed from the Play Store. The developers must remove the app from the Google Play Store immediately if the submitted license, registration, or declaration is no longer valid under the applicable laws.

Farhan S. Qureshi, Google’s Director for Pakistan, said, “Google is taking preventative measures by setting stringent requirements for Digital Lending Apps in order to reduce financial risk and ensure data privacy. We strongly believe that the new requirements imposed on
developers of personal loan apps will provide an extra layer of protection for the users.”

Under the new set of rules, a DLA is prohibited from accessing sensitive data, such as external storage, media images, contacts, and fine location. Whereas, Apps offering short-term personal loans, requiring repayment in full within 60 days from the loan issue date, are not allowed.

Pakistan is one of a small group of countries where Google has implemented additional requirements for DLAs. The new policy update is a significant step towards safeguarding consumers from harmful financial practices and ensuring data privacy.