Out of the eight companies granted licenses by the Securities and Exchange Commission of Pakistan (SECP) to operate digital nano-loan apps, only three are currently in operation. Interestingly, regulatory authorities have halted the pioneers in Pakistan’s digital lending sector from disbursing loans.
On the other hand, nano-lending companies have raised concerns that the strict regulations imposed on them do not apply to small loan platforms operating under State Bank regulations.
The SECP has clarified that it has published the names of the three nano lending apps – ‘SmartQarza,’ ‘Paisayaar,’ and ‘Abhi Your Salary Now’ – on the commission’s website because they are the only ones that have met the regulatory requirements outlined in Circular 10.
- Gold Lion Financial Pvt Ltd manages ‘SmartQarza.’
- JingleCred Digital Finance Services Ltd operates ‘Paisayaar.’
- ‘Abhi your salary now’ is under the management of Abhi Private Ltd.
Two other apps – ‘Muawin’ by Cashew Financial Services Ltd and ‘Zoodpay’ by Tez Financial Services Limited – are still under evaluation.
In contrast, the oldest nano lending company, ‘Barwaqt,’ operated by Seedcred Financial Services, has been prohibited from disbursing loans. SECP website does not list the ‘Easyloan’ of Sarmaya Microfinance and ‘Udharpaisa’ by Microcred. The authorities have also canceled the license for the digital app ‘Hamra’.
According to a senior SECP official, companies that have fulfilled the regulatory requirements for auditing their apps can operate. Other companies must complete the auditing process to gain approval for their apps.
‘Sarmaya’ will submit its audit report regarding Circular 10 on Monday, while ‘Microcred’ has not yet completed the necessary formalities.
Crackdown against lending apps
Following reports of a resident of Rawalpindi allegedly committing suicide due to difficulties in repaying loans borrowed from some nano-lenders, authorities took stringent actions against nano-digital loan apps. Subsequently, the Federal Investigation Agency (FIA) initiated a crackdown against nano-lending apps and filed an FIR against ‘Sarmaya’ and other companies.
The FIA has not yet submitted a challan in court despite filing the FIR in July. Additionally, the SECP has decided to cancel the licenses of companies, including insurance firms, with foreign directors, sponsors, and shareholders, pending security clearance from the Interior Ministry. This decision will impact a significant number of companies, with nano digital loan apps being among the most affected, as many of them have foreign directors or shareholders still awaiting security clearance from the Interior Ministry.
