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In a country where over 35% of the population remains without a bank account, smartphones have opened an unexpected gateway: instant loan apps. Fueling the fire is the lack of a formal credit build, which remains a privilege for the elite.
Pakistan’s financial services are rapidly digitizing, extending credit access to millions who have long been excluded from banks. From licensed fintechs like Abhi and Finja to embedded micro-lending features offered by Easypaisa and JazzCash, Pakistani local loan apps are revving up the digital banking space.
But alongside this fintech revolution comes a darker story. Predatory behavior, harassment scandals, and a regulatory race to keep up, are a few features that have plagued the name of loan apps to dirt.
How Loan Apps Work and Why They’re Popular
Most lending apps are all about providing quick, short-term loans with very little hassle. Usually, a borrower just needs to download the app, enter their CNIC details, snap a selfie, and link up their mobile wallet or bank account. To seem legitimate, even the fake ones send the loan amount within minutes of your request. Repayment is often automated, sometimes with hefty “processing fees” or rollover penalties if deadlines aren’t met.
For households managing medical emergencies, tuition deadlines, or even daily expenses, loan apps provide liquidity that banks do not, explaining why loan apps got their twisted side.
Loan Apps in Pakistan: Types and Features
Here’s a breakdown of legal and illegal loan apps in Pakistan, based on the Securities and Exchange Commission of Pakistan (SECP)’s whitelist and crackdown lists. Legal apps are approved NBFCs (Non-Banking Financial Companies) offering transparent services, while illegal ones often lure with no-credit-check loans but trap users in debt cycles.
Legal Loan Apps (SECP-Approved as of August 2025):
Abhi (SmartQarza): Earned wage access app; users get salary advances via employer partnerships, repaying from next paycheck. No interest, flat fee (Rs. 100-200). SECP-licensed, focuses on financial inclusion.
Paisayaar: Nano-loan app for small amounts (Rs. 500-5,000), quick approval via app, repayment in 30 days. Transparent KFS (Key Fact Statement) required.
Abhi Your Salary Now: Similar to Abhi, provides instant salary access. SECP-approved, with 1 million+ users, emphasizing no hidden fees.
Licensed players have taken diverse approaches to differentiate themselves from the rest. These include (but are not limited to):
- Earned Wage Access (EWA): Abhi allows employees at partner firms to access part of their salaries early, charging a small transaction fee rather than interest.
- Micro-loans: Easypaisa’s EasyCash and JazzCash’s ReadyCash tap into existing wallet ecosystems to provide emergency loans.
- BNPL & SME Financing: QistBazaar offers instalment-based shopping, while Tijara by CreditBook extends credit lines to small businesses previously left out of formal banking.
These apps follow SECP rules: max Rs. 25,000 per loan, upfront disclosures, no contact access.
Illegal Loan Apps (Banned by SECP/FIA as of May 2025):
- ForiCash, iCash, Start Loan, Mr. Loan: Predatory nano-loans with 200%+ interest, contact scraping for harassment. Banned for unlicensed operations; users report blackmail.
- Miscellaneous: 1xBet, Chicken Road, Aviator Games, Dafabet, 22Bet, Casumo, Rabona, 10Cric, Plinko, Bet365. Betting/gambling apps offering disguised loans. Which is why they are blocked by PTA and has been a subject of FIA raids. These apps have a way of trapping users with “easy wins” but lead to debt.
Over 141 illegal apps have been removed from stores (SECP, 2025), with 111 blacklisted (SECP, August 2025). Illegal apps work by promising “instant cash” but charge hidden fees, use AI for harassment, and evade blocks via APKs.
The Other Side: Scams, Harassment, and Digital Exploitation
The explosion of lending apps has also triggered a proliferation of illegal operators, unlicensed platforms offering easy credit but employing abusive practices. Borrowers report hidden fees, astronomical interest rates, and the notorious tactic of scraping contact lists to shame debtors publicly. Amnesty reports detail harassment campaigns, doctored images, and blackmail attempts.
These practices thrive especially through off-store APK downloads circulated on WhatsApp and Telegram, bypassing Google and Apple’s stricter policies.
Such abuses echo the global pattern seen with spyware-like exploitation: powerful digital tools misused against vulnerable groups. In Pakistan, online narratives split sharply, some praising quick relief in emergencies, others recounting harassment and financial ruin. There are countless incidents of suicides linked to loan app harassment, where family of the deceased reported Rs. 700,000 in accrued debt from a simple Rs. 15,000 loan broke the camel’s hump.
Loan Apps in India, Kenya: What We Can Learn From Other Countries
Loan Apps in India
In a similar light, we can look to the loan apps and their chokehold in India. Although now dispelled, India’s loan app crisis peaked in 2020-2023. With Chinese-backed apps like Instant Loan and Cash Guru causing suicides through debt traps, numerous cases highlighted the importance of regulations.
Borrowers faced 200% interest, data theft, and morphed photos shared with contacts. ESET reported deceptive apps circumventing Google Play, while the government banned 94 apps in 2023.
Privacy nightmares involved app permissions accessing galleries and contacts for extortion. The 2023 ban on 94 apps stemmed from complaints of fraud and abuse. India’s response: the Digital Personal Data Protection Act, 2023, mandates consent and grievance redressal, fining up to Rs. 250 crore for breaches.
Loan Apps in Kenya
In the same way, Kenyans have faced several scams linked to digital loan apps, often disguised as legitimate services. One prevalent scam involves fake apps that lure users in with promises of quick loans, only to end up stealing personal information, contacts, or even draining funds directly from their M-Pesa wallets. Back in 2021, authorities identified numerous unregistered lending apps that imposed hidden fees and outrageous interest rates, leaving borrowers in a tough spot, unable to pay back what they owed and facing the threat of harassment.
Some borrowers reported their contacts being spammed with debt-shaming messages when they defaulted, a tactic used to pressure repayment. Others discovered that the apps sold their personal information to third parties, exposing them to identity theft and further fraud. These predatory practices have become so widespread that Kenya’s central bank had to intervene, ordering hundreds of unlicensed loan apps to shut down.
What We Can Learn
In 2025, Pakistan banned 46 loan apps (Dawn), while India took action against 94 in 2023. Yet, India’s proactive legislation, such as the DPDP Act, stands in contrast to Pakistan’s largely reactive enforcement. India also distinguishes between skill-based gaming and betting, encouraging e-sports, whereas Pakistan has yet to develop such nuance.
Privacy breaches remain a common issue in both countries: India has seen blackmail cases similar to Pakistan’s harassment incidents. But unlike India, Pakistan lacks whistleblower protections and data audit mechanisms that could strengthen accountability.
Regulators Step In—But It’s a Cat-and-Mouse Game
The Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP) have moved to tame the “Wild West” of digital lending. Key interventions include:
- A whitelist of SECP-approved Digital Lending Apps (DLAs). Apps not on the list are illegal.
- All licensed NBFCs must issue a Key Fact Statement (KFS) before disbursing loans, ensuring borrowers know the fees, interest, and tenor.
- Licensed apps are forbidden from accessing contact lists or photo galleries.
- In 2023, over 84 illegal apps were removed from the Play Store. Pakistan also became one of the six countries where Google added extra scrutiny to loan apps.
Yet, despite enforcement, illegal lenders resurface quickly under new names and domains. The delayed Personal Data Protection Bill, still in draft as of September 2025, leaves privacy vulnerabilities exposed, with experts warning of data breaches akin to India’s 2024 Rs. 500 crore loss to fake apps.
Public Reaction: Hope Meets Distrust
Pakistanis are both grateful and wary. Licensed fintechs enjoy credibility, particularly as they frame offerings within Islamic finance principles or transparent fee structures. But rogue app scandals have sparked #DigitalLoanSharks on Twitter, with users sharing experiences of harassment.
On Reddit, a popular subreddit post had the Top Comment as:
This is testament to the reason i never use any locally made apps. Be it daraz, jazz or this crap. All of them are blatant spyware.
Furthermore, those people who ask about interest/bank profit being halal or not. Islam speaks of “Riba”. See it in action here.
Consumer advocacy groups, including the Digital Rights Foundation, highlight low financial literacy. Only 20% of adults understand loan terms, as a driver of debt cycles. A 2025 Dawn article noted rural users, with limited internet access, are especially prone to exploitation by unverified APKs.
The Economic Context: A Double-Edged Sword
According to SECP, in 2023, a reported Rs. 97 billion got disbursed to 4.5 million borrowers. Since then, the figure likely doubled. Yet, this growth strains households, with 60% of low-income borrowers rolling over loans. Licensed apps aim to bridge the $10 billion credit gap for SMEs, but illegal operators exploit desperation, offering loans as low as Rs. 2,000 with 200% interest.
The tough economic climate in Pakistan has sadly led to a surge in predatory loan apps that take advantage of those in need, making their financial struggles even worse. These apps engage in shady practices, like invading privacy and resorting to blackmail, which can have devastating effects on their users. Given this situation, it’s essential to focus on transparency, consumer protection, and ethical behavior in the financial technology industry.
The future hinges on a multi-pronged strategy: regulators have now begun enforcing strict compliance, platforms investing in transparency, and civil society boosting digital literacy. Only through this balanced approach can Pakistan transform its loan app boom into a tool of financial empowerment, ensuring digital finance uplifts rather than burdens its people.
