A Senate committee has revealed shocking details about how online loan apps in Pakistan have been exploiting vulnerable people. Some of these apps were charging borrowers interest rates as high as 1,800%, trapping them in endless cycles of debt.
In addition to unfair lending practices, many of these platforms also misused technology by gaining access to users’ phone galleries and contact lists, putting their privacy at serious risk.
Most borrowers turned to these apps for small loans to cover daily essentials such as food, rent, or medical bills. However, the extremely high interest rates quickly pushed them deeper into financial trouble. Instead of offering relief, the apps turned into a burden that worsened people’s economic struggles.
Since 2020, the Securities and Exchange Commission of Pakistan (SECP) has taken strict measures to tackle these practices. New regulations have been introduced to cap interest rates at 100%, making lending terms more reasonable and protecting borrowers from exploitation.
The SECP has also banned lending apps from accessing personal data, which was one of the major concerns raised by citizens and rights groups.
As part of the crackdown, more than 90% of fraudulent loan apps have already been shut down. Authorities continue to monitor the market to ensure only licensed and compliant platforms operate in Pakistan.
The revelations serve as a reminder of the risks that come with unregulated digital platforms. While financial technology can play a positive role in expanding access to credit, it must be monitored closely to protect people from predatory practices.
