Islamabad: Pakistan authorities have initiated strict action to combat illegal digital loan services involved in extortion and blackmail, blocking access to 43 rogue online loan applications.
The crackdown comes after a tragic incident in which a man died by suicide after being unable to repay loans he had taken from multiple mobile apps. His family reported that he was receiving “threats” from loan apps.
In response to the incident, Pakistan’s IT Ministry, Pakistan Telecommunication Authority (PTA), and the Cybercrime Wing of the Federal Investigation Agency (FIA) took swift action. They identified the illicit loan apps that employed unethical tactics, such as threats and blackmail, to force individuals into paying exorbitant sums. At least nine suspects have been arrested from a Rawalpindi office.
Federal Minister for IT and Telecommunication Syed Aminul Haque said that the IT Ministry has issued directions to the PTA chairman to take “strict action” against illegal loan apps which are involved in “blackmailing the people via phone apps and social media platforms.” At least “43 applications have been blocked so far,” Haque said. The ministry has also sought information from the relevant departments to protect vulnerable individuals from falling victim to such exploitative practices.
Suicide incident prompted action
The crackdown on rogue online loan apps was prompted by the tragic suicide of a 42-year-old man from Rawalpindi after failing to repay loans from multiple mobile apps. Threats from app officials reportedly pushed him to take his life, his family said. The man, who lost his job six months ago, reportedly borrowed Rs13,000 from the EasyLoan app, which quickly escalated to Rs100,000 due to interest. To repay the first loan, he took another loan from the Bharosa app, which reached Rs700,000 in weeks, according to local media. His brother filed a police report and called for action against the loan apps.
FIA initiated an investigation against both applications and issued arrest orders. The government is also focusing on efforts to raise awareness about responsible borrowing and the potential risks associated with unregulated online lending platforms. The citizens have been asked to report any suspicious loan applications or incidents to the PTA, the FIA’s cybercrime wing, or local police.
Loan shark apps
Loan sharks are illegal lenders who charge exorbitant interest rates. They are often part of organised crime and are involved in exploitative practices such as threatening and using violence to get their money back from borrowers.
Over the last two years, Pakistan has witnessed a surge in the number of loan apps with many luring people with misleading terms. While digital loan services have expanded access to credit for Pakistanis without formal bank accounts or stable incomes, concerns are being raised regarding potential exploitation during the lending process.
There are currently at least 13 instant lending platforms in the top 100 finance apps category on Google Play Pakistan, indicating the growing popularity of these apps. However, only two of these apps are licensed non-banking financial companies (NBFCs) and approved by the financial regulatory agency Securities and Exchange Commission of Pakistan (SECP). At least seven more apps are under evaluation, according to SECP.
