Pakistan’s anti-crime watchdog has vowed “strict action” and launched a crackdown against illegal loan apps in the country after the tragic incident of a man reportedly committing suicide after being harassed by loan officers.
On July 13, the Cybercrime Wing of the Federal Investigation Agency (FIA) said that it had arrested nine suspects for allegedly blackmailing people through online loan apps. The FIA team also recovered a large number of documents, computers, laptops and SIMs during the raid.
Inspector Badar Munir sealed different offices of the company located in a commercial plaza during police raids conducted in the Saidpur Road area. The FIA team raided two offices of the loan app in the G-8 sector of Islamabad and sealed their offices.
What happened?
A 42-year-old man from Rawalpindi city, identified as Mohammad Masood, reportedly died by suicide this week after he could not return the loans he took from several mobile apps.
Officials from the apps started threatening him on a daily basis, compelling him to take his own life, his wife told local media. She said that her husband had lost his job six months ago, and the family was unable to pay for the children’s school fees and rent.
The wife told Dawn news media that her husband had taken a loan of Rs13,000 from the EasyLoan app, which quickly rocketed to Rs100,000 a few days later due to interest. To pay back the first loan, the man took another loan from the Bharosa app, which also rose to Rs700,000 in a few weeks, she said.
Masood’s brother, Muzammil Husain, filed a report at the Race Course police station, saying that the suicide has left Masood’s two children “without support”.
FIA Director General Mohsin Hasan Butt immediately launched an investigation and issued orders of arrest.
Dark world of loan apps
The SECP Pakistan successfully convinced Google Play Store to remove two major loan shark apps, Barwaqt and EasyLoan. These apps were part of a larger trend of exploitative loan apps that have emerged in the past year, using misleading terms to lure people in.
According to Data Darbar research, there were over 27 instant lending platforms in Pakistan’s Google Play Finance Category, indicating the growing popularity of these apps. Additionally, 19 local currency loan apps including PK Loan, Easy Loan, Barwaqt, FORI MONEY, AiCash, WeCash, Quick Loans Bad Credit Loan and FlexiMoney, saw a combined total of 15.4 million downloads in the fiscal year 2022.
To combat this issue, the SECP has published a Whitelist of approved digital lending applications, and Google will validate apps based on this list before listing them on the Play Store. The Whitelist includes approved apps owned by licensed Non-Banking Financial Companies (NBFCs) and those that have applied for approval, while also requiring cyber security certification to ensure customer data privacy. The full SECP whitelist can be accessed here.
Digital Lending Applications Whitelist
These are the licensed lending non-banking financial companies approved by SECP:
- SmartQarza app (licensed NBFC as Gold Lion Financial Private Limited)
- Paisaayar (JingleCred Digital Finance Services Limited)
These have applied for approval and are being evaluated by the SECP:
- Udhar Paisa Safe & Reliable Loan (licensed NBFC as Mirco Cred Financial Services Ltd)
- Zaroorat Cash (Humraah Financial Services Limited)
- Barwaqt (Seedcred Financial Services Limited)
- Abhi – Your Salary Now! (Abhi Private Ltd)
- Muawin (Cashew Financial Services Limited)
- Easyloan Personal Loan Online (Sarmaya Microfinance Pvt Ltd)
- ZoodPay & ZoodMall (Tez Financial Services Limited)