Indonesia Financial Services Authority introduces implementing regulation on peer-to-peer lending business

29 November 2023

The Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) has just issued the implementing regulation for OJK Regulation No. 10/POJK.05/2022 on Information Technology-Based Co-Funding Services (“P2P Lending Services”) on
8 November 2023 as stated in OJK Circular Letter No. 19/SEOJK.06/2023 (“Circular Letter”).

In its Circular Letter, OJK provides technical guidance for the P2P Lending Services organisers (“P2P Organiser”) in relation to the organisation, management and operation of their services. Before the issuance of the Circular Letter, P2P Organisers followed guidelines provided by the Indonesian Co-Funding Fintech Association (Asosiasi Fintech Pendanaan Bersama Indonesia or “AFPI”) and OJK (in the form of guidance letters) for technical matters that are not specifically stipulated in the regulation. By way of background, AFPI was appointed by OJK as the official association for P2P Organisers in Indonesia in OJK Letter No. S-5/D.05/2019 of 17 January 2019. All P2P Organisers must be a member of AFPI and are obligated to follow the guidelines and code of conduct provided by AFPI.

In the Circular Letter, OJK confirms and stipulates requirements to which P2P Organisers must adhere including the following:

  • For consumptive funding, a P2P Organiser must ensure the borrower’s repayment capacity, where the total principal amount of funding (including the amount of funding received by the borrower from other financial institutions) must not exceed 30% of their income. The percentage will gradually increase to 50% by 8 November 2026;
  • Ensure that the borrower receives funding facilities from no more than three P2P Organisers;
  • The maximum amount of economic benefits of the P2P Organiser that can be charged to the borrower shall be as follows:
    • For productive funding: (i) 0.1% per calendar day from total funding provided to the borrower by the P2P Organiser as stated in the relevant funding agreement, which shall be valid for two years as of 1 January 2024, and (ii) starting from 1 January 2026, the said percentage shall be reduced to 0.067% per calendar day,
    • For consumptive funding, which shall be limited to only short-term funding with a period of less than one year: (i) 0.3% per calendar day from total funding provided to the borrower by the P2P Organiser as stated in the relevant funding agreement, which shall be valid for one year as of 1 January 2024, (ii) from 1 January 2025, the said percentage shall be reduced to 0.2%, and (iii) on 1 January 2026 afterwards, the percentage shall again be reduced to 0.1%.

The economic benefits received by the P2P Organiser shall include (i) interest/margin/profit sharing, (ii) administration fee/commission fee/platform fee and another fee equal to it, and (iii) other fees such as late penalty, stamp duty and tax;

  • The P2P Organiser can only access the camera, location and microphone of the borrower’s handphone;
  • The P2P Organiser may conduct the collection of funding through (i) desk collection (via text message, call, video call and other non-face-to-face meeting methods) and/or (ii) field collection. The P2P Organiser may also engage another party to conduct the collection as long as the said third party uses human resources that have obtained certification in the field of collection from professional certification institutions registered with OJK; and
  • The P2P Organiser can ask for details of the borrower’s emergency contact, which the P2P Organiser must only use for locating the borrower and not for collection purposes. The said emergency contact must also approve and confirm the use of their data as the emergency contact of the borrower.