KARACHI: The Government of Sindh has introduced a law on the imposition of strict penalties against private lenders providing loans on exorbitant interest rates and harassing debtors.
Sindh Governor Kamran Tessori signed the ‘Sindh Prohibition of Interest on Private Loans, Bill 2023’, allowing the imposition of strict legal actions against private lenders. The Sindh Assembly passed the bill on July 9 and sent it to the governor for promulgation.
The legislation was approved after the rising cases of harassment among debtors who acquired loans from private lenders including online loan apps.
Under the legislation, the private lenders will face a five-year jail term and up to Rs500,000 fines if found guilty of harassing debtors.
The law allows authorities to confiscate the assets of an individual or company involved in facilitating interest-based financing. It enables the imposition of strict penalties against individuals found receiving payments after providing loans.
Sindh Governor advised the citizens to immediately inform the government about the money lenders for carrying out strict actions against them. He added that the interest-based moneylenders will face strict legal actions over the complaints of the nationals.
There have been an increasing number of harassment and blackmail cases by debtors receiving loans on online apps which provide small loans at exorbitant interest rates.
An incident occurred when a man committed suicide in Rawalpindi after being blackmailed and harassed by an online loan company after he failed to pay a minor debt.
Muhammad Masood, aged 42, acquired a loan of Rs22,000 from an online loan company but missed payment deadlines. The people running the online loan company started blackmailing to leak his private data.
Masood committed suicide after being harassed and recorded an audio clip before claiming his own life. A case was lodged at the Race Course police station in Rawalpindi by the deceased’s brother.
Police raided the office of an online loan app company in Islamabad and arrested nine people. The company has been sealed and the equipment was confiscated. Citizens have been warned to beware of online loan apps.
