ISLAMABAD: Out of the eight companies who were issued licenses to operate digital nano-loan apps by the Securities and Exchange Commission of Pakistan (SECP), only three are currently operational, while the pioneers in the field of digital lending in Pakistan have been stopped from disbursing loans by the regulator.

On the other hand, nano-lending companies complain that stringent regulations imposed on them were not applicable to small loan platforms operating under State Bank regulations.

The SECP has said that only three nano lending apps - ‘SmartQarza’, ‘Paisayaar’ and ‘Abhi your salary now’ - have fulfilled the regulatory requirements under Circular 10, and their names have been released on the commission’s website.

‘SmartQarza’ is operated by Gold Lion Financial Pvt Ltd, ‘Paisayaar’ by JingleCred Digital Finance Services Ltd, while ‘Abhi your salary now’ is managed by Abhi Private Ltd.

Two other apps - ‘Muawin’ by Cashew Financial Services Ltd and ‘Zoodpay’ by Tez Financial Services Limited were still under evaluation.

Meanwhile, the oldest nano lending company, ‘Barwaqt’ of Seedcred Financial Services, has been disallowed from making loan disbursements, whereas two others - ‘Easyloan’ of Sarmaya Microfinance and ‘Udharpaisa’ by Microcred - are not even listed on the SECP website. The licence of digital app ‘Hamra’, meanwhile, has been cancelled.

Talking to Dawn, a senior SECP official said that only companies who had fulfilled the regulatory requirements of an audit of their apps have been allowed to operate, and the other companies have to clear the audit stage to get approval for their apps.

‘Sarmaya’ is expected to submit its audit report regarding Circular 10 on Monday, but ‘Microcred’ has yet to complete the formalities.

Strict action was launched against nano-digital loan apps when it emerged that a resident of Rawalpindi had allegedly committed suicide after failing to return the loans he had taken from some nano-lenders.

After the incident, FIA launched a crackdown against nano-lending apps and lodged an FIR against ‘Sarmaya’ and other companies.

Although the FIR was lodged in July, the FIA has yet to submit a challan in court. Meanwhile, the SECP has also decided to cancel the licences of companies - including insurance firms - that have foreign directors, sponsors and shareholders, but their security clearance was still pending with the interior ministry.

The decision will have impact at a large number of companies, but nano digital loan apps would be worst-hit, as almost all of them have foreigners as their directors or shareholders and a majority are still awaiting security clearance from the interior ministry.

Published in Dawn, September 17th, 2023