In the recent news, the Securities and Exchange Commission of Pakistan (SECP) has warned the digital lending Nonbank financial companies (NBFCs) of regulatory action if complete disclosure and fair business practices are not ensured by the industry as a whole. SECP called a zoom conference of the chief executives of NBFCs engaged in digital lending to speak about recent media statements about excessive interest rates, insufficient disclosures, and coercive collection procedures, purportedly being resorted to by digital lending platforms.
Digital Lending NBFCs Will Face Regulatory Action if They Fail to Adopt Best Lending Practices
Furthermore, during the zoom conference, SECP suggested that digital lending NBFCs to adopt the best lending methods, ensure full disclosures and impartial treatment of borrowers, avoid excessive pricing, deploy a robust complaint resolution means, and provide privacy security and data security. The lenders were advised that SECP does not want to suppress this developing industry with undue regulatory action, but would expect the industry to itself practice caution and develop standards that protect borrowers through acceptable disclosure.
Moreover, the spokesperson of NBFCs shared their concerns, among which was the existence of a large number of unregulated agencies operating in the digital lending domain. The attendees of the meeting shared that these unlicensed and unauthorized digital lending NBFCs apps are engaged in bringing the regulated sector into disrepute. They were informed that the SECP has already taken cognizance and very soon, in collaboration with other regulators and law enforcement bureaus, stringent action will be taken against these illegal platforms.
The Number of Satisfied Customers is Much Greater than the Unsatisfied Ones
The spokespeople of NBFCs also shared that even some licensed NBFCs were approached for subletting their license, an offer which the industry players have rejected. The NBFCs also told SECP that despite the incidents of objections on social media, the general number of these complaints is a very small fraction compared to the total number of loans extended by these digital lenders. They said that the number of satisfied clients was much more considerable in comparison to the unhappy clients, which they hope would not account for regulatory action.