Digital lending NBFCs have been warned by the Securities and Exchange Commission of Pakistan (SECP) that regulatory action may be taken if complete disclosure and ethical business conduct are not guaranteed by the sector.
According to a press release issued by SECP here on Wednesday, the SECP convened a zoom meeting of the chief executives of NBFCs involved in digital lending to discuss recent media reports about lending platforms allegedly using coercive collection tactics, inadequate disclosures, and exorbitant interest rates.
In the meeting, SECP gave the digital lending NBFCs advice on adopting best lending practices, ensuring full disclosures and treating borrowers fairly, avoiding exorbitant pricing, deploying a strong complaint resolution process, and ensuring privacy protection and data security.
Lenders were advised that SECP does not wish to suffocate this budding business with an overburden of regulations, but rather would anticipate that the sector will exercise prudence and create norms that safeguard borrowers via proper disclosure.
A considerable number of unregulated organizations are active in the digital lending industry, which worries the representative of NBFCs.
The participants agreed that these unlicensed and unapproved apps are working to delegitimize the regulated industry.
They were told that the SECP had already taken notice and that shortly, in coordination with other regulators and law enforcement organizations, harsh action will be taken against these illicit platforms.
The NBFCs further notified SECP that, notwithstanding the occurrences of complaints on social media, the aggregate number of these complaints is a very minor portion compared to the whole number of loans granted by these online lenders.
According to them, there were many more satisfied consumers than dissatisfied ones.
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