Securities and Exchange Commission of Pakistan (SECP) has reduced the maximum amount of nano loans to Rs. 50,000 from Rs. 75,000 for digital lenders, with a tenor of up to 90 days.
SECP also set a limit of Rs. 100,000 for borrowers for lending from multiple digital lenders at a time. “The aggregate amount of nano-lending extended to a borrower by NBFCs shall not exceed Rs. 100,000 at any point in time,” the recently issued circular said.
The regulator also revised the market structure for digital lenders or Non-Bank Financial Companies stating that compounding of markup shall not be allowed (no markup shall accrue either original markup or on late payment charges. An NBFC can rollover/restructure a loan in such a way that the period of the loan including the original and rollover tenor shall not exceed 90 Days.
An NBFC shall consider rollover restructuring as an extension of an existing loan and shall not treat it as a new loan but they shall apply the same APR and terms to loan rollover/restructuring as applied to the existing loan. Digital lenders shall not charge a Profit Rate (PR) exceeding 0.75% per day, with an APR not exceeding 74 percent.
An NBFC shall not recover from a borrower on account of all costs of the loan including the minimal interest/markup/profit rate and all other applicable fees (i.e processing fees services fees, notarial fees, handling fees, and verification fees, among others) as well as penalties for late payment and non-payment, an aggregate amount exceeding the principal of the loan.
The entire principal amount of the loan shall be disbursed by the lender on the issue date of the loan and shall be payable by the borrower either in a lump sum on the maturity of the loan, in equal intervals during the loan period, or on the extended maturity date in case of a rollover of a loan. The entire profit amount shall be payable by the borrower either in a lump sum on the maturity date of the loan or in equal intervals during the loan period.
A prompt/ alert in English and Urdu shall appear with the following minimum contents should appear, whenever a user opens the nano-le ding App and/or website. Digital loans are short-term loans with high interest rates and additional charges. It is essential that you understand the potential risk of over-indebtedness and only take loans that you can comfortably repay within the agreed timeframe to avoid financial difficulties.
Always read the terms and conditions carefully before availing any loan. Your financial well-being is our priority, SECP said. Digital loan providers have been asked to provide a calculator on the App/ website homepage where a user can evaluate the impact of costs including processing fees, platform fees, PR, late payment charges, and all other applicable charges for different borrowing options.
Any change or updates in the whitelisted App shall be made only with prior intimation to the Commission. Intimation will be considered acknowledged if the Commission has shared no observation query within working days, the circular stated.
Over 130 loan apps were blocked by the regulator in recent months with merely six digital lenders allowed to continue operations, including SmartQarza by Gold Lion Financial Pvt Ltd, Paisayaar by JingleCred Digital Finance Services Ltd, Barwaqt by Seedcred Financial Services Limited, Aitemaad by 4Sight Finance Services (Pvt) Limited, Hakeem by Walee Financial Services (Pvt) Limited, and Fauri Cash by Pakisnova Microfinance Company (Pvt) Limited.
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