Pakistan’s markets regulator issued new guidelines for digital lending in the country, cracking down on several sketchy practices that it said have become prevalent in the South Asian market.
The Securities and Exchange Commission of Pakistan said Wednesday evening that non-banking finance companies that disburse loans through digital channels including mobile apps will be required to disclosure key fact statements such as the credit amount they are granting to consumers, annual percentage rates, duration of the loan, and “all fee and charges.”
The non-banking finance firms will be required to share these key facts with consumers through audio or video and emails and text messages in both English and Urdu languages. “Any fee not included in key fact statement will not be charged to the borrower,” the regulator said (PDF) in a press release.
These firms will also not be able to access borrower’s phone book or contacts lists or pictures on the device “even if the borrower has given consent in this regard,” the regulator said. (You can read the full-guidelines here PDF.)
“The lender shall also not be allowed to contact the persons in the borrower’s contact list, other than those who have been specifically authorized by the borrower as guarantors and who have also provided their consent to the digital lender at the time of loan approval,” it added.
The move follows the regulator noticing rise in mis-selling, breach of data privacy and “coercive” recovery practices of licensed digital lending companies” and to safeguard public interest, it said.
Neighboring nation India also introduced strict rules surrounding digital lending in a move that has toppled the local fintech industry.
