ISLAMABAD

The Islamabad High Court has directed borrowers of digital lending apps Barwaqt and UdharPaisa to settle outstanding loans through a court-supervised liquidation mechanism, marking a major development in Pakistan’s troubled fintech lending sector.

The court appointed Syed Ashfaq Hussain Shah as Official Liquidator to oversee the affairs of Microcredit Financial Services Limited and Secured Financial Services Limited, the companies behind the UdharPaisa and Barwaqt apps, both currently undergoing liquidation proceedings.

Under the court-approved mechanism, borrowers have been instructed to obtain credit reports from Tasdeeq Information Services and DataCheck Limited, then deposit the higher outstanding amount into designated liquidation accounts maintained at Bank Markman Limited branches across the country.

The court clarified that repayments made through mobile wallets, banking apps or unauthorized recovery agents would not be recognized for credit clearance purposes. Borrowers must submit deposit receipts, CNIC copies and credit reports directly to the official liquidator through prescribed procedures.

According to reports, more than 750,000 borrowers could be impacted by the structured recovery process linked to Barwaqt alone, making it one of the largest digital lending settlements in Pakistan’s fintech industry.

The Securities and Exchange Commission of Pakistan was directed to coordinate with credit bureaus and relevant authorities to facilitate repayments and ensure borrowers’ credit histories are updated after settlement.

The court further ordered that no person or entity other than the officially appointed liquidator is authorized to collect, recover or deal with liabilities and receivables of the two companies during the liquidation process.

Barwaqt and UdharPaisa had emerged as prominent players in Pakistan’s fast-growing digital lending market before facing regulatory scrutiny over alleged compliance violations and aggressive recovery practices.

Industry observers say the case highlights growing regulatory pressure on Pakistan’s fintech ecosystem as authorities tighten oversight of digital loan applications and consumer protection standards.