Borrow Rs10,000 and end up paying Rs180,000: A Look into Loan App Trap

ISLAMABAD – From suicide cases to blackmailing, stories behind Loan Apps in Pakistan show dark side of easy money offering that lures poverty-stricken people, who end up getting more loans to pay previous one.

Amid a stern crackdown against such sham portals, online loan apps are reportedly charging sky-high interest rates of up to 1,800pc, trapping citizens in a nightmare of debt. The alarming details were revealed during a session of the Senate Standing Committee on IT and Teleco.

Senator Palwasha Khan and NCCIA officials warned that borrowers are being exploited through predatory apps that access their phones, getting all the data and then resort to blackmail to get hteor payments back.

Under such inhumane regulations, a person borrowing just Rs10,000 could end up owing Rs 180,000 in a single year.

Securities and Exchange Commission of Pakistan (SECP), which licensed these apps in 2020 without safeguards, has since revised rules, capping interest at 100pc and banning apps from accessing private data. Over 90% of fraudulent apps have now been removed.

Loan App Scam

Couple of years back, a man took his life after being harassed by illegal loan apps over unpaid debts. Nine people were held after filing of cases. The incident sparked public outrage, leading authorities to block 43 unlicensed apps and remove around 120 from Google Play and Apple stores.

Pakistanis urge strict action against accused and a complete ban on their companies.