Chinese investors withdraw billions from digital lending apps in Pakistan

Chinese investors, who had poured billions of rupees into digital lending apps, have now withdrawn their investments from Pakistan.

According to sources, these Chinese investors were the key players behind the influx of millions of rupees into digital lending apps, which contributed to the rapid growth of Pakistan's lending industry in 2022.

While some of these digital lending apps were operating with the approval of the Securities and Exchange Commission of Pakistan (SECP), others were unregistered and illegal. These unauthorized apps began offering loans due to weak enforcement by both the SECP and the State Bank. However, the SECP later tightened regulations to address the issue.

The SECP reported that it has issued licenses to 104 lending companies, while five licenses were revoked between 2020 and 2025. In the early stages, borrowers were able to obtain loans of up to Rs. 20,000, despite high-interest rates and aggressive recovery methods employed by these apps.

Over 20 million borrowers were said to have received loans worth billions of rupees from these digital lending apps, with more than 15 million people downloading apps from eight major lending companies on the Google Play Store.

The crackdown on both registered and illegal lending apps intensified after the tragic suicide of Muhammad Masood, a Rawalpindi resident, on July 11, 2023. He took his life after being blackmailed by one of the illegal digital lenders. These unauthorized lenders had gained access to borrowers' personal information, including family contacts, phone data, and social media accounts, with the borrowers’ consent.

Sources revealed that during a nationwide operation in 2023, the Federal Investigation Agency (FIA) registered 74 cases in response to complaints from affected individuals. The FIA also arrested 17 suspects involved in running illegal loan schemes in various cities and blocked over 30 accounts linked to these schemes.

Additionally, the FIA managed to access the bank accounts of several digital lending companies after taking action against both employees and higher-ups of registered companies. As a result, many companies reportedly settled with the FIA, leading to the suspension of investigations into most of these digital lending apps. However, dozens of victims are still awaiting justice.