How do ordinary people in Pakistan fall into the trap of digital loan ?
Digital Loan App : I took a loan of Rs 27,000 from the online personal loan app and had to repay Rs 34,200 in 90 days but 6 days later I got a call from the company that you have to repay the loan. The app was asked to repay the loan in 90 days a discussion started with the recovery agent of the company & now the situation is that I am being abused by the recovery agent.
Atif son a resident of Wazirabad in Punjab had a leg operation. They desperately needed money. Before he could borrow money from friends or relatives he saw an advertisement on social media for a lending company that was lending for 90 days.
Atif immediately applied for a loan & in a day & a half he got the money. Atif contacted the hospital for his son treatment and he gave some time for the operation. Exactly 6 days after taking the loan he received a call on his mobile phone from an agent of the online lending company that the loan repayment date had expired.
Atif was shocked by the phone call and told the agent that he had to repay the loan in 90 days. The agent told them no it is time to pay off your debt and you have to pay it.
The agent said that if you are unable to repay the loan you can deposit Rs. 6,600 to extend the loan repayment date. Atif told his wife. Both the husband & wife are worried about the treatment of the child & on the other hand this new trouble fell on their head. After doing this Atif took Rs. 6600 from a friend & paid the extension money.
Ten days later the recovery agent started calling him again to pay off the debt. Atif said that he did not have any money and would deposit the money in 90 days but the agent asked him to pay the money give extension money & extend it for another ten days or his relatives. Will be informed by phone.
Atif told LNN News that shortly after the end of the call from the agent a call came from one or 2 of his relatives saying that he had heard that you had taken a loan & were not repaying it. Atif said he took out another loan paid Rs. 6,600 and asked for an extension for another ten days.
Atif says that so far he has given Rs 13,200 to the company in the name of extension money & still has to repay the loan of Rs 34,200 & now he is being threatened by the agent and the matter has reached Galum Gluch.
Samar Elahi a resident of Layyah District Punjab told LNN News that he could not sleep for the past two days because he had taken a loan from the Personal Loan App for 3 months to repay the loan and ten days later he took loan. Payments are being made and threats are being made to inform their relatives.
Hassan Ali of Karachi also took a loan through an online app on a 21,000 loan he got Rs 16,800 which was deducted in the name of commission & then he was also harassed by the company.
Atif Samar Elahi & Hassan Ali are among the victims of taking personal loans through online apps who are seen complaining of ill treatment by companies after taking loans.
There are hundreds of victims on social media who have shared their experiences of online personal loan apps threatening to draw money in the form of illegal repayments & non payment.
While people are dissatisfied with companies treatment of online lending apps some say they borrowed from these online apps & paid back on time. He didn't have any bitter experience in this regard.
Among such people is Obaid Saghir a resident of Karachi who says that he took a loan of Rs 15,000 & repaid it within the time given by the company.
What are online loan apps?
There are many online lending apps on social media that offer small loans to people. These digital lending companies are available on various social media platforms under different names & most of them provide loans ranging from Rs 10,000 to Rs 50,000. These companies run fast easy timely loan advertisements on social media offering loan facilities to aspiring borrowers in 1 to 2 days.
These online lending apps are among the most downloaded apps from Play Store in Pakistan.
Securities & Exchange Commission of Pakistan a government agency told LNN News in a written statement that some of the digital lending apps are linked to non banking companies and are called SECP Regulated by CP and regularly licensed or licensed by the State Bank in this regard, however many apps are operating without a license which is illegal because lending is a licensed process & Pakistani law prohibits private lending.
How do online loan apps trap people?
Sharq pseudonym who works as a recovery agent on an online app told LNN News about how to get an online app loan & how the company deceives the borrower. He said that when a person applies for a loan on the online app 1st of all he is not provided correct information by the company. The details of loan value & repayment given in the app are just a hoax.
Whether it is a small loan or a large company it starts paying off after 7 days when the app says it's 90 days says Sharq. When a person applies for a loan he thinks that he has to repay the loan for 90 days but after receiving the loan he realizes that it has to be repaid after 7 days. In this case if the borrower calls the helpline she is always busy & there is no response from the customers.
If the lenders are unable to repay the loan it is charged in name of extension money which is extended by 10 days a week to repay the loan Sharq said. If a person is unable to repay a loan he is threatened & his relatives are told that he is suffering from mental illness.
Sharq said that he felt sorry for many people but the management of company does not give any concession in this regard.
He says the biggest problem is that these small borrowers take out a loan under duress & rush to apply for a loan by simply reading the company app or a lot of people read it. Do not hesitate & fall into the trap of these companies.
The SECP said it was overseeing digital lending & borrowing process & was also looking at the underlying risks involved so that lenders & To keep users safe.
On the issue of intimidation of creditors by companies SECP said that lenders should be properly informed & all the conditions for providing loans should be properly disclosed and in case of any complaint should contact the prudent company and If there is no solution from there contact the SECP & register your complaint at .
What the reason for growing complaints in the digital loan app?
Ammar Khan an investment and financial affairs expert told LNN News that the normal banking system is closely monitored by the SBP in the wake of growing complaints against digital lending app.
Consumer financing is a regulated business around the world to protect interests of the consumer he says. He said that digital lending apps are working all over the world but in Pakistan it has become a lone shark due to lack of transparency.
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He said there was no objection to such digital loan apps but their working methods should be monitored as they intimidate lenders & even harass their family members.
Ammar Khan said that these loans are often taken by poor people who urgently need money & do not know how to read & write properly. These apps often run ads for interest free loans & these people are deceived. When they are harassed by a company for repaying a loan they do not know which forum is where they can lodge their complaint or they are afraid of being intimidated by the company. Go
Ammar Khan said that as State Bank Pakistan SBP had issued a policy in 2009 customers who take loans from banks would not be intimidated and harassed. However he said that the SECP did not seem to have the capacity to take any action.
Are digital lending companies local or non local?
Talking about ownership of digital lending companies in Pakistan Ammar Khan said that these companies include local as well as non local companies.
He said that along with most of ocal companies management companies consisting of Chinese people are also working on the online platform in this regard.
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On the other hand online lending companies have been banned in China.
The SECP should be asked whether data is being shared with China through these apps when there is a ban on digital lending apps in China says Ammar Khan.
Banking companies
Giving its position in this regard SECP said that under the rules and regulations of NBFC ie non banking finance companies no such company has so far transferred the relevant records or documents of its business outside Pakistan. May it be until the Commission allows it.
The agency said that in order to deal with any potential threat the SECP was considering further regulations under which any company could securely store the data of its customers or creditors within Pakistan.
On the ban on digital lending companies in China & its permission in Pakistan SECP said lending is a legal process & the app can provide access to loans to those who have access to loans from commercial banks. Is not accessible.
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