AFPI Ensures Sanctions for Online Loans Who Violate Interest Rules

Transaction illustration (Photo: Doc. Antara)

JAKARTA - The Indonesian Joint Funding Fintech Association (AFPI) has confirmed that it will impose sanctions on peer-to-peer lending or online loan companies that violate the rules regarding interest rates.

AFPI General Chair Entjik S Djafar said, the code of conduct has been established, that interest cannot be more than 0.4 percent, and this must not be violated.

"If it is violated, it will be tried by the ethics committee," he said, quoting Antara.

Entjik emphasized that the interest rate of 0.4 percent per day is the maximum limit, not the minimum limit. This statement was intended to refute the accusations made by the Business Competition Supervisory Commission (KPPU) regarding the alleged loan interest cartel.

The KPPU suspects that AFPI has set a flat interest rate of 0.8 percent per day, which is attended by 89 registered members. KPPU said that this determination has the potential to violate Law Number 5 of 1999 concerning Prohibition of Monopoly Practices and Unfair Business Competition.

Meanwhile AFPI has changed the interest rate from 0.8 per day to 0.4 percent per day last year.

The interest of 0.4 percent is the daily interest rate for short-term loans, such as multipurpose products or cash loans. Meanwhile, for long-term productive loans, such as for MSMEs, the interest is set at 0.03 percent to 0.06 percent per day or around 12 percent to 24 percent per year.

Even so, continued Entjik, many P2P lending players set interest below these provisions, especially for productive loans.

Furthermore, to ensure that these rules are enforced by P2P lending actors, Entjik said AFPI has a team formed specifically to patrol. If there are indications of violations, AFPI's ethics committee will hold a hearing and impose sanctions.

"Our ethics committee is independent of non-platform members, mostly legal entities, lawyers," he added.