Launching P2P Lending Roadmap, OJK Highlights Revocation of Moratorium and Collection Mechanisms

The Financial Services Authority (OJK) has just launched roadmap of development fintech P2P Lending for the 2023-2028 period also issued Circular Letter (SEOJK) No.19 of 2023 regarding its implementation. This roadmap will serve as a guide for all stakeholders in the P2P Lending sector.

"Growth outstanding financing and health levels as well as their contribution to borrowers, including MSMEs, will be even greater. Roadmap "This will be the future determinant of whether the industry is truly strong and responds appropriately to the enormous trust, responsibility and expectations from society and the government," said Chairman of the OJK Board of Commissioners Mahendra Siregar in his official statement.

Roadmap for the Development and Strengthening of Information Technology-Based Joint Funding Services (LPBBTI/fintech P2P Lending) contains a number of strategic programs, including lifting the P2P moratorium in the productive sector and structuring loan collection mechanisms.

OJK formed a task force or task force who will implement and evaluate roadmap of, targets and work programs for the next five years. This task force will consist of OJK, associations and P2P Lending. Here's the summary:

Capital, billing, and moratorium

OJK has determined a strategic program that will be implemented in the next five years in three implementation phases, including:

1. Strengthening capital, governance, risk management and human resources through compliance minimum equity provisions, development and strengthening credit scoring, as well as HR certification programs.
2. Strengthening regulation, supervision and licensing through the preparation of follow-up actions to the Banking System Development and Strengthening Law (PPSK), relaxation maximum financing limit to support the productive sector, regulation of economic benefits (interest rates), and opening of the P2P Lending moratorium, specifically the productive sector and MSMEs.
3. Strengthening consumer protection through structuring billing mechanism (debt collection), controlling misleading advertising, and eradicating and enforcing criminal sanctions against illegal P2P Lending.
4. Development of ecosystem elements through structuring and strengthening the role of associations, strengthening insurance/credit guarantee support, and expansion of distribution channels financing to the productive sector and MSMEs.
5. Development of data infrastructure and information systems through development of Pusdafil and SLIK.

Interest rates and late fees

Launching roadmap of This P2P Lending was followed by the issuance of OJK Circular Letter Number 19/SEOJK.05/2023 on November 8 2023 which was a follow-up to POJK Number 10/POJK.05/2022 concerning Information Technology-Based Funding Services.

One of the rules contained in this Circular is related to determining the maximum limit of economic benefits (interest rates) and late fines based on the type of funding for the productive sector and the consumptive sector.

It is also stated that the determination of economic benefits and late fines must not exceed 100% of the loan value stated in the agreement. Therefore, P2P providers are asked to pay attention to borrowers' ability to pay. One of them is ensuring that borrowers do not receive funding from more than three P2P Lending providers.

Moratorium measures

The P2P registration moratorium has been in place since February 2020. This step was taken by the OJK because the rapid development of fintech in Indonesia was not followed by the fulfillment of fintech requirements, especially the rise of illegal P2P.

OJK recorded that public losses due to illegal investment and P2P reached IDR 120,7 trillion throughout 2022. Apart from that, the P2P industry is also faced with bad credit challenges since last year. A total of 25 P2Ps were recorded as having bad credit (TWP 90) exceeding 5% as of January 2023.

Therefore, it is hoped that this moratorium will provide time for the OJK to perfect its regulations and supervision of the P2P industry. Apart from that, P2P players can also improve quality and service, especially regarding risk management and consumer protection.

As of September 2023, OJK reports outstanding financing disbursed by P2P Lending rose 14,28% (YoY) with a total of IDR 55,7 trillion and the Default Rate (TWP 90) was around 2,82%. Of the total loan distribution, the MSME segment took a portion of 36,57%. There are 102 P2P players who have been registered and licensed with the OJK.