Indonesia’s financial services authority (OJK) is planning to ease the rules governing peer-to-peer (P2P) lending licences before lifting the moratorium on them in the third quarter of this year.
Bambang W Budiawan, Deputy Commissioner of financing companies and other financial institutions supervisory at OJK, said some P2P lending institutions had approached OJK for licences before the moratorium ends. “There are about 10 firms that are interested in applying for licences,” Budiawan told reporters on Tuesday.
He said the proposed new rules will require just a one-step licensing process, compared with the current two-step process requiring a principal licence and an operational licence.
He said the minimum lending limit of 2 billion rupiah per each borrower may also be revised. “We will review the lending limit as the necessity of borrowers for productive lending is different from consumptive lending. In consumptive lending, it should be reduced to only 500 million rupiah for each borrower and productive lending it should be over 5 billion rupiah,” Budiawan explained.
OJK introduced new regulations on P2P lending in July last year whereby existing lenders were told to maintain at least 2.5 billion rupiah in equity within a year after the regulations were released, at least 7.5 billion rupiah within two years, and at least 12.5 billion rupiah within three years. New P2P lenders should have at least 25 billion rupiah of equity.
However, Bhima Yudhistira, Director at the Center of Economic and Law Studies (CELIOS), said the lifting of the moratorium is too early as the P2P lending industry is still facing many problems, including high non-performing loan (NPL) ratio, illegal fintech, and low equity.
“The important thing about P2P lending is not how many players there are but how good-quality P2P lenders can give productive loans to SMEs outside Java Island. Already there are 102 P2P lenders, and it will only increase if the moratorium lifts,” he told DealStreetAsia.
“With so many players, the public will find it difficult to differentiate between legal and illegal firms, and it will be a challenge for OJK to supervise them,” he added.
According to OJK records as of March 2023, loan disbursements by P2P lenders reached 51.02 trillion rupiah, up 36.45% on an annual basis from 50 trillion rupiah in March 2022.
Despite the growth, 23 companies had an NPL of over 5%, including Tanifund which is being closely monitored by OJK. “We will take a forward step (including revoking of licences) if Tanifund can’t solve its problems within the deadline,” Budiawan explained.
Besides the high NPL, the P2P lenders are also facing low equity. Currently, 26 companies have equity below 2.5 billion rupiah and are struggling to meet the regulations before July this year.