Fintech in Indonesia – Consumer Lending

Consumer lending is regulated in Indonesia, with a particular focus on information technology-based money lending services (peer-to-peer lending), as regulated under Financial Services Authority (OJK) Regulation No. 77/POJK.01/2016 regarding Information Technology-Based Money Lending Services, dated 29 December 2016.

The OJK has the authority to regulate, register and issue licenses, as well as supervise the fintech consumer lending industry. A company engaging in the provision of peer-to-peer lending activities can have a maximum foreign ownership of 85%, which means at least 15% of the ownership must be in the hands of Indonesian parties.

A company that wishes to register with the OJK is required to have a minimum issued and paid-up capital of 1 billion Indonesian rupiah. Once an applicant is registered, it will have one year to apply for a license from the OJK, and the company's minimum issued and paid-up capital must then be 2.5 billion rupiah. A company engaging in the provision of peer-to-peer lending is not allowed to engage in any other business activities. The regulation refers to information technology-based money lending services (peer-to-peer lending) as the provision of financial services that allow the lender to meet the borrower in the framework of entering into a lending agreement in rupiah directly through an electronic system by using the internet.

Collective Investment Schemes

The prevailing regulations do not categorize activities into collective investment schemes. They only specifically regulate alternative finance products in the form of equity crowdfunding platforms. Peer-to-peer lending is described as an information technology-based money lending service, which is specifically regulated under a different regulation.

Equity crowdfunding is regulated under the auspices of the OJK, through OJK Regulation No. 37/POJK.04/2018 regarding Equity Crowdfunding, dated 31 December 2018. The OJK has the authority to regulate, register and issue licenses, as well as supervise equity crowdfunding activities

This first appeared in Lexology GTDT Fintech 2021.

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