We should mothball SECP (and SBP) and just have Self Regulating Organizations (SROs)?
Banks running rampant with bancassurance, the nanotech lenders running rampant with predatory loans, meanwhile both regulators issue useless Caveat Emptor circulars running into pages
Let the tweets do the talking.
Premature celebrations
We celebrated that predatory loan apps have been taken down.
Taking SECP for a ride
It appears that was premature because the SECP-regulated entity Sarmaya Microfinance is running two loan shark apps.
But at least Sarmaya Microfinance is a regulated app. There are unregulated entities running such apps too.
Self-governance or else
SECP which should be clamping down on such activities is suggesting self-governance as it feels such predatory activities promote financial inclusion.
Enforcement in India
Similar apps are prevalent in India too. But at least, there the regulators or law enforcement agencies taking some action.
According to the complaint filed by Himanshu Goel on July 14 on the National Cybercrime Reporting Portal, Goel alleged that while browsing through Facebook, he had come across an advertisement which promised a hassle-free loan of Rs 50,000.
After downloading the loan app called “On Stream”, the app asked him permission for accessing his contacts, gallery, among other things to which he acceded.
Following this, he was granted a loan of Rs 6870 and then the accused started harassing him using his contacts and photos, which they had access to. The man, in his complaint, stated that he had paid one lakh to them till now, but he was still being harassed to pay more.
During the police investigation, the accused were traced and it was found that a huge call centre was being run on three floors of a building in Dwarka Sector -7 for the last two years in the name of Fly High Global Services and Technology.
Subsequently, a raid was conducted and the police found that a whole syndicate was being run by employing 149 telecallers and three team leaders along with the owner, Anil Kumar, a resident of Dwarka Sector-3.
They purchased 300 SIM Cards in the name of Silpani International and used 100 SIM Cards out of this for the purpose of sending derogatory WhatsApp messages to compel victims to go with their extortion threats, police said.
The accused, in association with their Chinese counterparts, extorted huge amounts of money. So far, they have siphoned an amount of Rs. 10 crore to two Chinese people, namely Albert and Trey, and have received Rs. three crore as commission since March, 2021. They used to talk on the multilingual Ding Talk app.
Please follow our social media accounts
Meanwhile, SECP is sending out emails in English to please follow their social media accounts.
Aap bey ghairat hain
The fintechs are so afraid of the regulator that after SECP gave them a warning about SELF-GOVERN or ELSE, they resorted to the following.
The masterstroke here is that the person making the threat is reportedly the same as the one who Sarmaya Microfinance claimed they fired due to bad behavior.
This tells you that the entire business model of these predator loan apps which SECP cutely calls financial inclusion apps revolves around harassment and threats. How else do they expect to recover the money?
The priorities of regulators
Creating lobbying organizations
The bancassurance scam and predatory lending scam showed that the entities that are regulated by SECP and SBP exploit all the loopholes and gray areas to stick it to the people. How, rather, WHY does SECP think that creating self-regulating organizations will in any way improve anything when the entire modus operandi of these organizations comprises scamming women, widows, elderly, less educated, the poor, and the illiterate?
When the entire business model of nanotech lenders relies on harassment and making threats, I fail to understand how a self-regulatory framework allows them to introduce best practices.
I don’t have it in me to create another meme.