The Securities and Exchange Commission of Pakistan (SECP) has issued new digital lending standards to safeguard against fraud in the digital lending ecosystem. Ffter taking notice of increased fraud incidences in the country, the SECP issued new rules and regulations to safeguard against mis-selling, breach of data privacy, and coercive recovery practices.

The SECP has issued digital lending standards for Non-Banking Finance Companies (NBFCs) which are undertaking lending activities through online channels. New regulations have set a minimum standard of mandatory disclosure and provision of Key Fact Statement (KFS) before a loan could be forwarded to any borrower.

Other conditions include loan amount approved, annual percentage rates, tenure of the loan, installments/lumpsum payment amounts with date(s), and all fees and charges. To ensure ease of understanding, the lending app will display the summary of KFS through a video/audio, screenshot, and email/SMS in both English and Urdu languages.

Any fee not included in KFS will not be charged to the borrower. The licensed digital lender will be required to disclose its full corporate name and licensing status on its lending platform(s)/app(s), and ensure that any advertisement and publication is fair and does not contain misleading information.

Moreover, the SECP has also specified a comprehensive grievance redressal mechanism. Furthermore, to ensure confidentiality and privacy, a digital lender will not be allowed to access the borrower’s phone book or contacts list, or the photo gallery, even if the borrower has given consent in this regard.

The lender will 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. All in all, the data will not be stored on any cloud infrastructure outside the jurisdiction of Pakistan.

Credit : Independent News Pakistan-WealthPk