Banks, MFSs asked to suspend payment services for illegal loan apps

Bangladesh Bank has instructed banks, mobile financial service (MFS) providers and other payment service providers (PSPs) to immediately suspend payment services to operators of mobile apps involved in unauthorised online lending.

The banking regulator also requested the Bangladesh Telecommunication Regulatory Commission (BTRC) and other relevant authorities to remove mobile apps involved in unauthorised online lending from online platforms, including the Google Play Store, and permanently stop their use and operation.

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The central bank issued separate letters to those authorities recently.

BB also asked banks to take effective measures to raise public awareness against such apps and report the steps taken to its Payment Systems Supervision Department.

In the letter, BB said some mobile apps operating on online platforms are providing loans at high interest rates, exposing borrowers to financial losses and harassment.

It said such apps can gain access to users’ phone contacts, personal and sensitive information, photos, videos and text messages without their knowledge.

Borrowers who fail to repay loans may then face blackmail, threats to publish sensitive information and photographs on social media, and other forms of harassment, it added.

Citing Section 15(2) of the Payment and Settlement Systems Act, 2024, Bangladesh Bank said no person can operate an online or offline platform involving investment collection, lending, fund custody or financial transactions without its approval.

As the lending activities of the identified apps are being conducted without Bangladesh Bank approval, they are illegal and constitute a punishable offence under Section 37(1) of the law, it said.

The central bank warned that operators of such apps are directly involved in a punishable offence. It also said scheduled banks, MFS, digital financial service and payment service provider institutions that facilitate transactions related to such lending could be considered involved in the offence as financial transaction channels.

Under Section 19(4) of the law, Bangladesh Bank therefore directed all institutions and individuals concerned, including the operators of the identified apps listed in an attachment, to immediately stop providing payment services to them.

Earlier, the Bangladesh Financial Intelligence Unit warned the public against taking loans through unauthorised mobile apps and digital platforms and named 30 illegal apps involved in extortion, data theft and financial fraud.

The 30 unauthorised apps identified by the BFIU are: Sathi Loan, Pop Cash, FinCash, Quick Loan, Quick Taka, Dhaka Fin, LoanVibe, Dost Loan, Taka Cash Loan, KWANZA Loan, SSH Money, LoanBuddy, Cash-Hora, Alo Cash, Fast Loan, Easy Taka, Dhorjo Loan, Fin Dot Do, Taka Cash Loan, BongoCash, Asha Loan, Subidha Loan, Smart Loan BD, Online Loan BD, City Online Loan, BD Shohoj Loan, Cash Loan, Sonali, Loan Haat and Taka Nao.

Earlier, on August 24, The Daily Star published a report titled “Fake online loans lead borrowers into costly traps”.

The report said people are losing their hard-earned money to online scams that offer cheap loans and quick investment returns. It also said some unauthorised mobile apps are targeting people by offering digital loans.