[ad_1]
The fintech industry appears to be getting the attention of the Pakistan Competition Commission (CCP), but it has not proven to be promising. Mobile apps that offer microloans have been found to be involved in false advertising, illegal collection of personal data, and have proven to be exploitative overall.
The idea of ​​microfinance is fairly simple. It serves the purpose of helping the underclass by providing micro-loans, the repayments of which fund loans to other families. In theory, this should be a safe, low-risk borrowing vehicle that allows borrowers to cover short-term expenses or invest in a business to start a cycle of steady returns. However, this feature comes through an unverified channel that has often proven predatory around the world, including Pakistan.
Many of the apps involved in this practice have been criticized for being corrupt, having extortionate interest rates and generally lacking transparency – problems that are particularly prevalent in Pakistan.
According to the CCP, apps and companies offering micro loans have not yet met the conditions of the Non-Banking Microfinance Companies Act, which requires a regulatory framework to exist before lending, and the loans are worth more than Rs.10,000. Yes, and the interest rate should match what is advised. Instead, borrowers are adopting a proactive approach, by collecting personal data, regulation is more borrower-oriented, and the disparities in loans offered are too great to create consistent policies. cannot be standardized and the interest rate is too high.
Fraud is taking place and the authorities should create a commission of inquiry. This will result in stronger regulation, a more transparent working model, and harsher penalties for those breaking the law. Illegally established now should be closed, and when it is done on such a small scale, there must be a comprehensive policy framework to facilitate fair and safe lending. Hmm.
[ad_2]
Source link
