Indonesia has seen a boom of online lending companies in the past three years and has had its share of controversies with irresponsible lenders and borrowers.
Regulations for the online lending sector were introduced in 2016. The country’s Financial Services Authority (OJK) requires all online lenders to register with the regulator. They can begin operating and will be tightly monitored by OJK as they apply for an official business license. The process can take several months if not longer.
OJK publishes a list of all registered and fully licensed companies, which also serves as a reference point for consumers because it tells them which firms are already vetted by the government. The list was updated on October 8 and it shows that six new online lenders were awarded the full business license at the end of September after the first batch of business licenses was issued in May.
The six firms in the second batch are :
- Modalku (the Indonesian entity of Singapore-headquartered Funding Societies)
- KTA Kilat
- Kredit Pintar
- Maucash (part of Astra Financial, the financial services arm of the Astra conglomerate)
- Finmas (the Indonesian entity of Hong Kong-headquartered Oriente in partnership with the Sinarmas conglomerate)
Finmas, a relatively new player in Indonesia which launched in February this year, told KrASIA that its license came through after the firm fulfilled stringent ompliance requirements under the OJK Regulation No. 77/POJK.01/2016. In a statement sent to KrASIA, Reza Pratama, the director of compliance at Finmas said that the firm appreciates the diligence by which OJK issues licenses only to companies that meet all the rules.
Indonesia is seeking a middle way in how it regulates the lending space, Kuseransyah, the head of the Indonesian Fintech Association told KrASIA in an interview in late 2018.
China was very open to online lenders and allowed thousands of them to start operating before shutting many down after malpractice was reported. Meanwhile, India has been very strict and only allows a handful of companies to operate, according to Kuseransyah.
Indonesia, he predicted, would have about 200 registered online lending companies waiting for license approval by the end of 2019. Currently, there are 127 on OJK’s list, of which 13 are fully licensed.