In a landmark move to address regulatory gaps and consumer complaints related to digital lending apps, the Securities and Exchange Commission of Pakistan (SECP) has successfully collaborated with key stakeholders. This strategic partnership involves Google, the Pakistan Telecommunication Authority (PTA), and the Federal Investigation Agency (FIA).
The SECP’s recently released annual report (2022-23) highlights the significant strides made in tackling issues associated with digital lending apps. The report underscores the emphasis placed on addressing complaints and regulatory loopholes, leading to successful collaborations resulting in the shutdown of illegal loan apps.
To ensure fair business practices within the digital lending landscape for Non-Banking Finance Companies (NBFCs), the SECP has implemented digital lending standards. As part of its commitment to investor education, the SECP has revitalized its ‘Jamapunji’ program to raise awareness among the public about their rights as financial consumers.
One of the key measures introduced by the SECP, in line with Circular No. 15 of 2022, is a ban on licensed NBFCs collaborating or integrating with digital lending applications lacking SECP approval. This regulatory step aims to ensure compliance, transparency, and regulatory oversight within the digital lending sector.
In collaboration with Google, the SECP has played a pivotal role in developing a Standard Operating Procedure. This procedure mandates prior approval from the Commission before providing access to lending applications on the Google Play Store. The objective is to ensure that only approved digital lending platforms are accessible to consumers.
To further safeguard consumer interests, the SECP has imposed country-specific licensing requirements for digital lenders, validating their capability to provide or facilitate personal loans. Additionally, Google has taken measures to restrict personal loan apps targeting users in Pakistan from accessing user contacts or photos. The SECP has approved the first two lending apps in compliance with Circular No. 15 of 2022.
In response to the surge in complaints against digital lending apps, the SECP has introduced a comprehensive set of digital lending standards. These measures aim to establish equitable and fair business practices by lending NBFCs, promoting transparency and consumer protection.
The collaboration with Google, particularly the development of a Standard Operating Procedure (white List), ensures that lending apps must obtain prior approval from the SECP before gaining access to the Google Play Store. This strategic move is poised to curb the proliferation of unlicensed digital lending platforms in Pakistan, aligning with the SECP’s commitment to a secure and regulated financial environment.
