By Staff Reporter
ISLAMABAD: Pakistan’s government said on Monday it had blocked 43 loan applications and launched a public awareness campaign to protect citizens from falling victim to fraudulent loan schemes, after a man’s death sparked an investigation into the online lending industry.
The man, identified as Muhammad Nadeem, died in Rawalpindi last week, allegedly by suicide, after he was threatened by loan apps for failing to pay back ballooning interest on his debts, according to local media reports.
The Federal Investigation Agency (FIA) has arrested nine suspects, booked 19 and sealed several offices of loan apps in Islamabad in connection with the case, which has prompted authorities into action.
Minister for IT Syed Aminul Haque said in a statement that the targeted companies, operating within the lending industry, were registered with the Securities and Exchange Commission, but were offering illegal loans to unsuspecting customers.
“These unscrupulous entities have resorted to blackmailing innocent individuals [and] exploiting their financial vulnerabilities,” Haque said, adding that he was in direct contact with the FIA director general to ensure effective coordination in the action against illegal loan apps.
He also condemned the tactics employed by loan mafia groups, including threats of violence, blackmail, and misuse of personal data, and urged citizens to report any suspicious loan applications or incidents to the authorities.
Pakistan Telecommunication Authority (PTA) Chairman Major General (retd) Hafeezur Rehman had ordered immediate and swift action against illegal loan applications, Haque said, highlighting the involvement of mafia groups operating through social media platforms, particularly Facebook, in such cases.
The ministry has noted the prevalence of online posts promoting money-making schemes, the statement said, advising citizens not to respond to such advertisements and avoid sharing sensitive data or money with such parties.
The statement also said that a comprehensive public awareness campaign had been launched to safeguard the public from fraudulent loan schemes, as the operation progresses and the authorities remain vigilant in their efforts to bring the culprits to justice.
According to research done by Data Darbar, 27 of the apps featuring Google Play Pakistan’s top 100 finance apps were instant credit apps as of June 28. Of them, 19 were offering loans in the local rupee and the top eight alone had estimated downloads of 15.4 million since their launch.
Many of these apps are not registered entities and lure users with low interest rates but deduct a sizable chunk of the amount at source in the name of service and/or processing charges. The annual percentage rates are reported to be in the range of 11-39pc.
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