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| On 8 months ago

Review: Why Federal Government Shutdown Online Loan Companies

Last updated on February 4th, 2023 at 08:02 pm

It is no longer news that the Federal Government of Nigeria recently shut down some online loan companies. The government took this action due to the complaints they received about some malpractice perpetrated by these companies. Ever since these companies popularly called “Loan Sharks” have stopped their operations. Here’s the full detail of why the federal government shutdown online loan companies. 

Why Federal Government Shutdown Online Loan Companies

What are online loan companies?

These are companies that allow you to borrow loans online. Basically, online loan companies enable you to complete the whole borrowing process without setting foot inside a bank. They are exclusively operated digitally. Hence, they are a very convenient way to borrow money, unlike conventional banks.

Additionally, online loan companies have less stringent borrowing requirements, unlike bank loans. This is one of the major advantages they have over conventional banks.

Are online loan companies illegal?

No, online loan companies are not illegal in Nigeria. However, some companies operate their online lending platform illegally in Nigeria. These illegally operated online loan companies have not registered their business with the Corporate Affairs Commission (CAC). Hence, they do not have the license to operate their businesses. In Nigeria, every business owner needs to register their businesss with CAC for it to be legal. 

Generally, online loan companies are legal in Nigeria as long as the government has duly authorised them. Several other online loan companies operate their platform legally in Nigeria.

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Why did the federal government raid and shutdown 8 online loan companies?

The Federal Government shut down 8 online loan companies due to malpractice perpetrated by the financial institutions. Customers of these online loan companies complained about this malpractice, prompting the government to start investigating. 

The first thing that prompted this move was the invasion of customers’ privacy by naming and shaming them online. These financial institutions used this means to recover their loans from debtors. 

Also, the interest rate these online financial institutions charge violates the principles of how lending is done. This prompted FG to start investigating the location of these financial institutions to shut them down.

What online loan companies were affected?

Here is a list of the online loan companies that the federal government raided and shut down:

1. OKash

2. EasyCredit

3. Kashkash

4. Easy Moni

5. Speedy Choice

6. Soko Loan

7. GoCash

Basically, Blue Ridge owns most of these loan companies. They all operate on the third floor of a certain four-storey building in Ikeja, Lagos.

Can I still obtain loans from online loan companies?

Yes, you can still obtain loans from online loan companies. As stated earlier, there are some legally recognised online loan companies in Nigeria. Basically, these companies are guaranteed to provide you with instant online loans within a few minutes of your application. Also, since these companies are legal, you do not have to worry about malpractice.

Bottom line

Although the Federal Government has shut down the operations of illegal loan companies, it does not affect the operations of the legal ones. It is still very possible for you to obtain a loan from the registered loan companies in Nigeria. Borrowing from online companies is still a more convenient alternative to borrowing from banks.

Do you need a loan? Be sure to visit this loan platform that allows you to compare loans from different lenders in minutes. It offers the best and ensures that you get nothing less.