SECP steps in to shield borrowers from digital lenders

The Securities and Exchange Commission of Pakistan (SECP) on Wednesday restricted the digital lending platforms from taking coercive measures for recoveries and barred them from shifting borrowers’ data outside Pakistan. The SECP through circular no. 15 has directed the digital lenders that the borrowers’ data cannot be stored on any cloud infrastructure outside the jurisdiction of Pakistan. The commission has also issued digital lending standards applicable to Non-Banking Finance Companies (NBFCs) undertaking lending activities through digital channels/mobile applications (apps). The regulator has announced these measures amid growing complaints from the public that the digital lending platforms were involved in mis-selling, breach of data privacy and coercive recovery practices. The circular has been forwarded to licenced digital lending companies and placed on the SECP website for public consumption and awareness.