Key points
- Indonesia initiated the abolition of unhealthy peer-to-peer (P2P) lenders.
- The hunt began with the implementation of new financial requirements and regulations.
- P2P lenders will soon undergo a quality check to get OKJ’s approval.
Indonesia launched the abolition of “unhealthy” peer-to-peer lenders that currently overflow the country. The initiative was established with the implementation of new financial requirements and regulations. Industry sources reveal that the abolition movement will cleanse the online lending platforms tainted with excessive customer complaints.
According to the new rules set forth by the financial services authorities of Indonesia, P2P lenders will face specific requirements. The base requirement of funds for lenders rose to 25 billion rupiahs, which calculates to $1.67 million. This value rose from a base fund value of 1 billion rupiahs. OJK also demands P2P lenders to maintain a worth of 12.5 billion rupiahs in every situation. OJK validated these new rules and regulations with immediate effect from July 4. “ This will create a natural selection and filter out which peer-to-peer firms are healthy or not,” stated Freddy Karyadi, a lawyer with Fintech customers.
With the global economic conditions caused by the COVID-19 pandemic, P2P lending platforms became extremely popular. They allow MSMEs to generate cash flow and under-banked citizens to obtain loans. Over the years, many online lenders focused their attention on the booming financial market. Since Indonesia has a considerable unbanked population, P2P bridges the financial gap in the nation. However, some unhealthy P2P lenders without stations in Indonesia practice unethical techniques to retrieve debts.
OJK noted that Indonesia had about 150 legal P2P lenders before president Widodo’s moratorium on permits for FinTech lenders, imploring to cleanse the sector. Currently, OJK recognized a three-fold increase in illegal online fund lenders. Therefore, all unregistered P2P platforms will face the requirement of getting permits. OJK will also supervise the implementation of new regulations on P2P lenders.
Reference,
https://www.reuters.com/markets/rates-bonds/indonesia-seeks-crack-down-unhealthy-peer-to-peer-lenders-2022-07-22/
