Chinese investors, who funneled billions of rupees into digital lending apps, have now wrapped up their investments in Pakistan, according to sources. These investments played a major role in the booming digital lending industry in Pakistan in 2022, as the Chinese injected millions of rupees into various platforms.
Some of these digital lending apps operated legally under the approval of the Securities and Exchange Commission of Pakistan (SECP), while others ran illegally due to lax enforcement by both the SECP and the State Bank. However, the SECP has since tightened its regulations. The commission has issued licenses to 104 lending companies, although 5 licenses were canceled between 2020 and 2025.
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Initially, borrowers were able to secure loans of up to Rs20,000 despite the exorbitant interest rates and aggressive recovery tactics employed by these platforms. Over 20 million borrowers reportedly took out loans worth billions of rupees from these apps, with more than 15 million people downloading the apps of eight major lending companies from the Google Play Store.
The crackdown on both registered and illegal lending apps began following a tragic incident on July 11, 2023, when Muhammad Masood, a resident of Rawalpindi, committed suicide after being blackmailed by an illegal digital lender. These illegal lenders, operating with the consent of borrowers, had accessed personal information such as family contacts, mobile data, and social media accounts.
During a nationwide operation in 2023, the Federal Investigation Agency (FIA) registered 74 cases related to complaints against these loan apps, arrested 17 suspects involved in illegal online lending schemes across various cities, and blocked over three dozen accounts. Sources noted that the FIA eventually gained access to the bank accounts of these digital lending companies after applying coercive measures against both employees and senior officials of registered firms.
Subsequently, many of these companies settled their matters with the FIA, and ongoing inquiries into most of these digital lending apps have been halted. However, dozens of victims of these schemes are still awaiting justice.
