Digital lending companies: SECP working with Google, Apple to remove unauthorised apps

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) is actively coordinating with Google and Apple for the removal of unauthorised loan apps offered by digital lending companies.

Sources told Business Recorder here on Monday that a total of 58 unauthorised 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 the 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.

According to the SECP data, the commission has received a total of 1,171 complaints against licensed digital lending companies from July 2021 to January 2023.

The SECP data compiled, on Monday, revealed that almost 99 percent of the complaints received by the SECP have been resolved/closed and relief was granted in case of all genuine complaints.

As of October 31, 2022, these licensed digital entities had disbursed Rs60.13 billion in 4,254,201 loans, resulting in an average loan size of Rs14,135 per loan, the SECP data added.

Sources further informed that since July 2022, a total of 108 complaints have been received against unauthorised apps of digital lending companies. In this regard, besides liaising with the local regulators concerned (ie, Pakistan Telecommunication Authority (PTA), Federal Investigation Agency (FIA), and the State Bank of Pakistan (SBP)), the SECP has also liaised with Google and Apple for the removal of unauthorised 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, the licensed NBFCs can now operate only one mobile application. In addition, all the NBFCs operating mobile apps or planning to launch a new app are required to submit a certificate from the PTA-approved cyber security audit firms regarding compliance with all requirements of the SECP's Circular 15 of 2022.

In response to growing concerns about misselling, 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.

Further, in order to ensure confidentiality and privacy of data, digital lenders will not be allowed access to the borrower's phone book or contacts list or photo gallery, even if the borrower has given consent in this regard, the SECP officials added.

Copyright Business Recorder, 2023