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Nigeria To Crack Down On Loan Apps Used To Recover Illegal Debt



Illegal Loan Apps in Nigeria

The Nigerian government has said that it will crack down on lending applications that are used to take advantage of customers and collect unlawful debt.

The Interagency Joint Task Force’s Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022 are being violated more frequently, which coincides with the enforcement action.

While many people have benefited from the financial access provided by some digital money lenders (DMLs), there is a shadowy aspect to the sector as some loan sharks use dishonest and unlawful means to recover debts. Borrowers are experiencing fear and worry as a result of these unlawful debt recoveries, which also involve impersonations, forgeries, and privacy violations.

Nevertheless, as inflation bites deeper, a growing number of Nigerians are turning to lending applications to satisfy their financial demands. According to the National Bureau of Statistics (NBS), rates rose to a startling 28.92% in December 2023 from 28.20 percent in November.

The current inflation wave is making it extremely difficult for Nigerians to maintain their level of living, which may raise the chance of loan defaults and force them to make painful changes like cutting back on spending.

The head of the FCCPC, Adamu Abdullahi, stated in a statement on Monday that the commission is aware of the spike in loan demand around this time, which raises the danger of default because of the volume of loans and regular cash flow issues.

But using unethical recovery techniques or breaking the law cannot be the answer, Abdullahi stated.”We are stepping up enforcement actions and taking a zero-tolerance approach to any consumer exploitation or abusive conduct, whether in balance calculations, loan default enforcement, or recovery procedures,” he stated.

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Abdullahi continued, saying that the commission will be subjecting approved lending apps to a tougher compliance framework in the coming days. This will include any new requirements that may be necessary, as well as potential processes for apps that have been otherwise blacklisted.

“In order to promote and enhance fairness among competitors as well as among consumers, the Commission will welcome demonstrated and timely compliance by all legitimate operators,” he stated.

“The scrutiny process will include law enforcement action against operators who do not have the Commission’s approval, in addition to regulatory prohibition and consequences.”

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