SECP issues ‘Whitelist’ of Digital Lending Applications on its website

In pursuance to Google’s updated policy for digital lending apps in Pakistan, the Securities and Exchange Commission of Pakistan (SECP) on Wednesday published the Whitelist of Digital Lending Applications on its website.

Initially, the SmartQarza app has been approved, which is a licensed non-banking financial companies (NBFC) with the name of Gold Lion Financial Private Limited.

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In addition, three others applications – Udhar Paisa Safe & Reliable Loan (licensed NBFC as Mirco Cred Financial Services Ltd), Zaroorat Cash (Humraah Financial Services Limited) and Barwaqt (Seedcred Financial Services Limited) – have applied for approval and are being evaluated by the SECP.

Sources in the SECP stated that 10 other licensed digital apps have been asked to apply for approval.

The whitelist will serve as a reference point for Google during listing of the companies on Play Store from.

After May 31, 2023, apps that have not been approved by SECP will no longer be available for use or download on the Play Store. The whitelist will be updated when a digital application gets approved or rejected by SECP.

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The list contains the names of approved apps owned by licensed NBFCs, as well as the applications of licensed NBFCs which were operating till December 27, 2022 and have applied for approval. Cyber security certification from a PTA approved firm is needed to certify that the apps do not gain access to customers’ personal data.

Circular 15 mandates compliance with digital lending standards, inter-alia the placement of adequate cybersecurity measures and controls to ensure confidentiality, integrity and the restriction from accessing borrowers’ phone books or photo galleries.

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The SECP has asked all NBFCs engaged in digital lending activities to comply with the updated requirements specified in Circular 15 and submit the required documentation for app approval at earliest to avoid any inconvenience.

Potential borrowers are also told to verify the app status from SECP’s whitelist before signing up on any digital lending app.

Several people have complained that the digital lending apps have been using unethical ways to recover loans, accessing customers’ personal data and charging higher rates than advertised.

Last month, the Competition Commission of Pakistan (CCP) warned the general public about rising trend of fraudulent mobile app-based micro-credit and nano-loan facilities that are targeting vulnerable consumers, belonging to the lower- to middle-income groups

The initial finding of CCP revealed that these applications have been downloaded over 10 million times. It said that there are over 30 applications under its investigation.