Indonesian fintech authority sets new rules for lending platforms


Amid the emergence of hundreds of online lending platforms in the local market, the Indonesian Financial Services Authority (OJK) has laid down six conditions as pre-requisites for lending players to obtain an operating license.

OJK has ruled that lending platforms looking to obtain a license must use digital signatures; obtain permission from the IT Ministry; work with microinsurance service providers; cooperate with banks; collaborate with credit scoring operators that have OJK licenses; and team up with a debt collection company that’s registered with the Indonesian Fintech Association.

Furthermore, the OJK says it categorizes lending fintech into three types. The first are those with a closed ecosystem, like Go-Jek which work with online lenders to provides loans for its drivers. The second are startups with an open ecosystem but serve only a limited group of borrowers like farmers and fishermen. The third category is lending platforms that provide consumer and payday loans.

OJK says it will prioritise licenses for the first and second type of online lending platforms as they are seen to provide productive funding, but says that as many as 30 per cent of those currently applying for registration at the OJK are those offering consumer loans.

At the moment, OJK says it is processing the registration of 145 lending platforms, while the number of players that have already registered is 99 in total. Of those that have been registered, only one has obtained an operating license. OJK says 25 lending platforms are currently in the process of applying for a license.

These numbers are modest compared to the number of illegal lending players operating without registration or a license which, according to OJK, totals over 230 in the market.

Despite calls by the public for the OJK to take action against illegal lenders, the organization said it does not have the legal basis to do so.

OJK’s director of fintech licensing and monitoring, Hendrikus Passagi, told local media that fintech lending is currently only governed by an OJK Regulation which gives OJK the authority to drop sanctions and take action against only those lenders that are already registered with the authority.

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