A Senate committee has uncovered alarming practices by online loan apps in Pakistan, revealing that some were charging interest rates as high as 1,800%, trapping vulnerable borrowers in crippling debt.
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Beyond excessive charges, many apps were also found to be misusing personal data, including unauthorized access to users’ phone galleries and contact lists, raising major privacy concerns.
Most borrowers had turned to these platforms for small emergency loans to cover basic needs like food, rent, and medical bills. Instead of offering financial relief, the predatory rates left them further entangled in debt cycles.
The Securities and Exchange Commission of Pakistan (SECP) has since stepped in with strict measures. New regulations cap interest rates at 100% and ban apps from accessing sensitive personal data. As part of the crackdown, over 90% of fraudulent loan apps have been shut down, with authorities continuing to monitor the digital lending market.
Officials say the action aims to ensure that only licensed and compliant platforms remain in operation, safeguarding citizens from exploitation.
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Experts warn that while fintech solutions can expand access to credit, they must be closely regulated to prevent abuse and protect the financial well-being of the public.
