Fintech Association: New OJK Regulations Can Reduce Risk Of Failure To Pay

JAKARTA - The Indonesian Joint Funding Fintech Association (AFPI) assesses that the implementation of OJK regulations related to the decrease in peer-to-peer lending (P2P Lending) lending interest rates and restrictions on loan platforms can reduce the risk of default by customers.

The regulation is contained in the Circular Letter of the Financial Services Authority (OJK) Number 19 of 2023 concerning the Implementation of Information Technology-Based Joint Funding Services (LPBBTI) issued on November 10, 2023 and will be implemented as of January 1, 2024.

"Strengthening this rule can help reduce over-leverage risk for prospective borrowers who tend to borrow from many fintech platforms simultaneously, and can limit the amount of loans that can be accessed by individuals, thereby reducing the risk of default and overpayment," said AFPI General Chair Entjik S. Djafar in Jakarta, quoted from Antara, Thursday, January 11.

In the SEOJK, starting January 1, 2024, online loan interest rates (Pinjol) for the consumer sector officially fell from 0.4 percent per day to 0.3 percent per day. Then gradually until 2026, the loan interest rate will still decrease to 0.2 percent per day in 2025 and 0.1 percent per day in 2026.

Meanwhile, loans for the productive sector, interest rates also fell 0.1 percent per day, then in 2026 it fell to 0.067 percent.

In addition, the new OJK rules also limit borrowers to only borrow a maximum of three platforms at the same time. According to Entjik, these restrictions can improve the quality of loans because P2P Lending business actors are more likely to attract more responsible and quality borrowers. "Canon borrowers must be more selective in choosing the platform to borrow," he said.

But he noted that the restrictions could also have an impact on reducing the loan volume provided by the P2P Lending company, because potential borrowers can only choose from three platforms. This can reduce the company's revenue and overall performance.

"This task force can also have an impact on the limited diversity of products and services offered by fintech lending providers. If the choice of borrowers is limited, the variety of the products offered may become more limited as well," said Entjik.

P2P Lending company, added Entjik, needs to continue to adapt in offering superior services to attract consumers from the three selected platforms.

Utilization of alternative data can be a tactic to assess risks and attract quality borrowers, reduce potential risks of default.

In addition, Entjik assessed that the P2P Lending company also needed to provide active education to prospective borrowers about the benefits of choosing certain fintech platforms, promoting the advantages of the company over others.

"Through adaptation of strategy, focus on better services, and a smarter approach in lending, fintech lending can survive sustainably to overcome the negative impact of the policy," he concluded.