ISLAMABAD: The Competition Commission of Pakistan (CCP) has taken notice of the various emerging concerns regarding mobile applications on Google Play Store offering nano/micro personal loans to vulnerable customers, mostly belonging to the lower to middle income class customers.
After the appearance of a news report in a leading newspaper, a preliminary probe was conducted, and it was noted that these mobile applications on Google Play Store were offering nano-loans without fulfilling the legal requirements of Non-Banking Micro Finance Companies (NBMFC’s) law.
The NBMFC law offers a framework to regulate nano-loans only above PKR 10,000/-, whereas most of these applications are only offering loans smaller than this. As per the initial findings, these applications have well over 10 million downloads by the general public.
The preliminary findings inter alia revealed that these mobile applications had contradictions between interest rate/processing fee charged from the borrower versus the rates advertised. There are also instances of faulty claims of data privacy and security, collecting personal data on the pretext of offering loans, the discrepancy in repayments, and credit range advertised vis a vis those actually offered.
The Commission is the first regulatory body that formally initiated an enquiry into the matter in September 2022, to probe possible violations by these mobile applications with regards to Section 10 of the Competition Act 2010, i.e., Deceptive Marketing Practices.
Based on the preliminary findings, the enquiry committee is authorized to thoroughly probe and submit an enquiry report to the Commission with respect to any or all possible contraventions under the Act against all nano-loan mobile applications.
The enquiry committee has been working on the case rigorously, consulting all the concerned stakeholders and seeking relevant information for deliberating the matter objectively. In this regard, meetings were also held with the SECP, the Pakistan Telecommunication Authority, and the Federal Investigation Agency.
Copyright Business Recorder, 2022
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