ISLAMABAD: Licensed Digital Lending Non-Banking Financial Companies (NBFCs) have made rapid progress and have started to show disruption in Pakistan’s lending landscape and are proving important in advancing the financial inclusion journey, data shared by the Securities and Exchange Commission of Pakistan (SECP) showed on Friday.

SECP licensed six fintech-enabled NBFCs, which collectively reached 365,239 borrowers with disbursement of over Rs 6,139 million via 858,998 loans, meaning many borrowers secured more than one loan from these lenders.

Data published by the SECP shows that the average loan size of these digital NBFCs ranges from Rs1,000 to Rs80,000 depending on the nature of the business and the target market of these entities.

“These are small loans readily available to borrowers, but because they are digital-based, borrowers cannot default and skip repayment,” a senior SECP official said, adding that defaulter data is available. shared with the State Bank of Pakistan. therefore, the defaulter cannot benefit from any other financial service.

The official added that under this mode of lending, the small amount requested by the borrower is credited in the digital wallet of the borrower within few hours as the digital processing of the loan is fast and does not require any collateral.

Newly licensed digital lending NBFCs include Finja Lending Services Limited, SeedCred Financial Services Limited, Qisstpay BNPL Limited, Tez Financial Services Limited, Cashew Financial Services Limited and CreditFix Financial Services Limited. These NBFCs provide financial solutions to otherwise unserved and underserved people through digital means and include Nano Lending, Peer-to-Peer (P2P) Lending and Buy-Now-Pay-Later models, etc.

All of these licenses have been issued over the past three years to NBFCs engaged in digital lending using innovative fintech solutions.

The first fintech-enabled NBFC license was issued in 2019 and only 55,528 applications were honored disbursing Rs 495 million, while by the end of 2021 the six licensees had disbursed a total of Rs 6.13 billion rupees to 365,239 borrowers.

“It’s a solution to the traditional complaint that banks weren’t interested in small loans, and the majority of borrowers were those who either didn’t have credit cards or wanted to spend the amount on whatever. what an industry that doesn’t process credit cards,” the official added.

The SECP said new NBFC license applications have been received from investors who intend to engage in fintech-based lending.

Posted in Dawn, February 5, 2022