File photo. Rizwan Tabassum—AFP
The Pakistan Telecommunication Authority (PTA) on Monday blocked 43 digital lending apps operating without a license, as such “loan sharks” come under increasing scrutiny following last week’s suicide of an unemployed man who had been harassed by the lenders after taking a short-term loan.
Last week, a man in Rawalpindi committed suicide following persistent blackmail and extortion from loan apps over a failure to repay debt that had compounded to Rs. 800,000 from an initial loan of just Rs. 13,000. In a statement, the Information Technology and Telecommunication Ministry said the PTA had acted against such predatory apps on the directives of Minister Syed Aminul Haque.
It said Haque had directed PTA Chairman Maj. Gen. (retd.) Hafeezur Rehman to take “strict action” against illegal loan apps that were “blackmailing the masses.” It further cited the minister as noting the “dire need” for an awareness campaigns to educate the public on how to avoid becoming victim to the blackmail tactics of such loan apps. He also urged the victims to register complaints against these apps with the PTA, the Federal Investigation Agency, and local police.
According to the statement, the minister also contacted the FIA director general and was briefed on the action already being taken against these apps.
In a statement, the FIA said it had launched a nationwide crackdown against illegal loaning companies, registering 74 cases for enquiries on complaints from various victims and three FIRs against individuals and companies. Thus far, it said, 17 suspects had been arrested for running illegal online loan schemes from various cities and 30 bank accounts had been blocked.
A FIA spokesperson further said the FIA cybercrime wing had sealed five offices of companies involved in this illegal activity, noting that only companies that were licensed by the Securities and Exchange Commission of Pakistan (SECP) could legally issue loans through online apps.
Amidst an ongoing economic crunch, there has been a growing trend of citizens, unaware of the predatory practices involved, securing loans through “easy loan” apps. After the loan is provided, the companies resort to harassment, including blackmail and extortion, to recover the money, which carries heavy interest, often doubling the loaned amount within days.