The State Bank of Pakistan (SBP) has advised financial institutions to review the licensing status of their existing customers offering digital lending services and their authorization to conduct business.
Regulated entities (REs) are advised to ensure that the licensing status of digital lending platforms/mobile applications and their authorization to conduct business are duly verified by the relevant regulatory bodies (SECP, SBP, etc.) as part of the KYC/CDD process, the circular stated.
It has been observed that a number of unauthorized/unlicensed digital lending mobile application(s) and platforms are using banking channels, for loan disbursement and collection, and to perform creditworthiness checks through integration with the bank accounts of customers.
Such usage of digital banking channels and integrations with mobile banking platforms by these unauthorized/unlicensed digital lending apps pose serious consumer protection concerns and may also cause reputational risk for banks.
A list of currently authorized/licensed entities involved in digital lending businesses can be accessed at web links below:
https://www.sbp.org.pk/f_links/f-links.asp
https://www.sbp.org.pk/PS/PDF/List-of-EMIs.pdf
https://www.sbp.org.pk/ps/PDF/List-PSOs-PSPs.pdf
https://www.secp.gov.pk/document/digital-lending-apps-being-run-and-administered-by-duly-licensed-lending-nbfcs/?wpdmdl=46367&refresh=6422812bba4611679982891
Subsequently, REs are advised to implement reasonable measures, including at the time of customer onboarding and transaction monitoring, to ensure that their banking channels and platforms are not used by unauthorized financial service providers either directly or indirectly.
In this regard, REs shall not extend services such as deposits or lending products, mobile application integration with third parties, payment gateway services, credit scoring and creditworthiness checks, wallet services, and/or API integration services to unauthorized/unlicensed digital lending platforms (individuals or businesses) either directly or indirectly.
The instructions shall come into force with immediate effect. Any non-compliance thereof will attract appropriate enforcement action under the applicable laws and regulations.
Source: Pro Pakistani