Ahsan Mahmood needed Rs 10,000 to pay the electricity bill on the last dates of the month. He contacted 2 of his friends through a social media messaging application. For the next 24 hours, he did not get any positive response, but instant loan ads started appearing on all the social media applications in his mobile.
After seeing the advertisements so often, Ahsan felt that it is better to take a loan from here instead of asking friends. The salary was expected to take at most a week longer, while most applications were taking several months.
Ahsan installed an application from the Google Play Store and applied for a loan. According to him, while applying for the loan, he thought to take a little more money because the interest rate was only one percent. After applying for a loan of 15,000, a loan of 7,000 was approved for him, but he also received an amount of 5,600 rupees.
A few days after receiving the loan, he received a call from a recovery agent from the lending company. When the recovery agent asked him to return the money, he was surprised that he had taken the loan for a month.
The recovery agent told them that if they deposit Rs 1400, they can get an extension of seven days. Taking a loan from an acquaintance, he deposited Rs 1400 but after a few days he received a call from another agent.
According to Ahsan, he has so far deposited Rs. 9,500 on a loan of Rs. 5,600, while still more money is being demanded from him. If they do not pay more money, their relatives and friends are being threatened with calls.
Not limited to this, the calling agent has told them that they have the photos and videos from their mobile gallery as well.
Ahsan is not the only one who is forced to pay much more than the loan in the form of interest in case of borrowing from mobile applications and not being able to pay back, but many people in Pakistan these days, especially the low-income youth, are victims of this. are happening
According to Mutahir Khan, co-founder of Data Darbar, an organization that collects data on such cases, lending through mobile applications started in Kenya. Then this practice became popular in India. Along with this, it also started in America and UK etc. but due to strict laws, not many people became victims there.
Are there scams through lending mobile applications?
According to a report by the Intelligence Center of the Punjab Home Department, these applications charge 40 to 80 percent interest from users on a monthly basis.
The report states that most of the information is hidden from the consumers while giving loans and the debtor is harassed by calls from various recovery agents for not repaying the loan on time.
Applicant's identity card, photographs and reference of 2 next of kin are taken from the applicant. Photos, videos and contact numbers in the mobile are accessible by these applications. On the basis of which they are harassed and huge sums are charged as interest.
How many users?
Currently there are several applications for providing loans in Pakistan.
According to the report released by 'Data Darbar', more than 1 crore 90 lakh users have downloaded them.
According to the Punjab Home Department report, the number of users who downloaded the first 10 applications is more than one crore.
According to Mutahir Khan, it is not necessary that all users who download have applied for a loan and taken a loan. Only a few applications are registered and there is no significant difference between them.
Why don't social media companies block such ads?
More than the ads, the responsibility in this matter lies with Google, which as the regulator decides whether these applications should stay on the Play Store or not.
Mutahir Khan says that in the US, more than 36 percent of loan applications are removed from the Play Store, while in Pakistan there is still no policy in this regard. It is not even seen whether these companies comply with the local laws or not.
What is the legal status of lending applications and these companies?
According to the spokesperson of Security and Exchange Commission of Pakistan, the company has to be registered under non-banking financial services for lending.
"Regarding instant loans in Pakistan, the SECP recently issued a circular according to which mobile application lending companies must be registered with the PTA."
According to SECP spokesperson, 11 companies have been registered so far in this regard. In which some companies are working to facilitate the shopping process for shoppers and at home. While the rest of the companies are giving instant loans to the public.
According to the spokesperson, the SECP is taking steps to eliminate apps that cheat people instead of facilitating them.
However, there is no major awareness campaign in this regard so far to inform people about illegal and fraudulent loan apps.
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