ISLAMABAD: The spread of information technology and telecommunications footprint across the country, along with a competitive environment in the digital lending industry, can help millions of people achieve financial independence in the country , according to the managing director of a microfinance company.
Habibur Rehman, CEO of Sarmaya Microfinance, however, said the biggest challenge in digital finance is the widespread operation of unregistered and illegal platforms that exploit their customers.
“As the reach of digital lending platforms grows, not only are new lending options available to citizens in remote areas, but it would also contribute to the digitalization of the economy,” Rehman said during a briefing. media interview.
“Access to finance is a basic human need in the modern era and getting loans in an emergency is difficult in rural areas because people don’t have banking products like credit cards. and ATMs are not available”.
Mr Rehman said people were forced to either borrow money from friends and relatives or from moneylenders, known as Soodkhor (usurer).
“But increasing digitization can bridge this gap with the help of a vast network of money transfer platforms like Easypaisa and Jazzcash.”
While Easypasia, owned by Telenor’s microfinance bank, and Jazzcash, a subsidiary of Mobilink Microfinance Bank, provide small loans, the nano-digital loans sector meets emergency cash needs with rapid disbursements.
“Like Sarmaya, everything is totally smartphone-based in this industry, bypassing documentation and customers have access to money wherever they want,” Rehman said.
He said the loan process is based on an Android phone with internet connectivity and after basic formalities, loans ranging from Rs 2,500 to Rs 50,000 are sent to a mobile money wallet like Easypaisa and Jazzcash. .
“Customers who repay on time end up building their credit history for larger loans,” he said.
The names of the defaulters are forwarded to the State Bank.
Sarmaya, launched a year ago, has 68,000 customers and the company has so far disbursed Rs 1.5 billion among 550,000 customers.
Sarmaya’s default rate is 6.8%, but the company expects this figure to drop as customers begin to realize that non-payments are affecting their credit history.
There are only two nano-digital lending companies in the country, while two others have recently obtained operational licenses.
At least 12 other companies have applied for licenses from the SECP.
Posted in Dawn, November 10, 2022