CCP Warns Against Using Micro-Credit, Nano-Loan Facilities

News Desk

Islamabad: Pakistan’s Competition Commission (CCP) has warned consumers about potential fraud, privacy breaches and deceptive lending practices associated with mobile applications offering micro-credit and nano-loans.

The warning comes as millions of users, particularly those from low- and middle-income groups, increasingly turn to app-based lending platforms for quick access to short-term financing.

According to preliminary figures cited by the CCP, such applications have been downloaded more than 10 million times.

The commission said it has launched an inquiry into several mobile loan applications and observed that some of the companies behind them frequently change their names, premises or corporate identities, making it difficult to trace their operations.

The CCP said it is coordinating with the Securities and Exchange Commission of Pakistan (SECP), Federal Investigation Agency (FIA) and Pakistan Telecommunication Authority (PTA) over the issue.

Consumers urged to verify lenders

The commission advised borrowers to verify whether a lending application and the company operating it are legally registered and compliant with Pakistan’s regulatory requirements before taking a loan.

It also warned users against automatically granting apps broad access to their mobile devices.

According to the CCP, some applications may seek permissions that could expose users’ personal information or compromise their privacy. Consumers have therefore been advised to carefully review an application’s permissions, terms and conditions before accepting a loan.

Advertised loans may differ from actual terms

The commission also raised concerns about discrepancies between the terms advertised by some loan applications and the conditions presented to borrowers during the actual lending process.

Users may be offered information regarding the loan amount, repayment period, deductions, payment methods and additional charges. However, the CCP said these terms have in some cases differed from what was initially advertised, potentially misleading borrowers.

Consumers have been urged to calculate the actual amount they will receive, the total amount payable and any additional charges before accepting a loan.

Warning over repayment scams

The CCP also cautioned borrowers about fraudulent recovery practices.

It said there have been instances in which individuals claiming to be recovery agents provided their personal bank account details instead of the lender’s official account for loan repayments.

Payments made to such accounts may not be credited towards the borrower’s outstanding loan, creating additional financial problems.

The commission advised consumers to make repayments only through verified and officially registered accounts associated with the lending service.

Growing demand raises concerns

The CCP’s warning highlights the risks emerging alongside the rapid growth of digital lending in Pakistan.

While mobile-based loans offer convenience to consumers who may have limited access to conventional financial services, the commission said borrowers, particularly financially vulnerable households, need to exercise greater caution.

The inquiry is still underway, and the CCP has advised the public to conduct due diligence before downloading or using mobile lending applications, rather than relying solely on claims made in app advertisements.