Collateral Association Input Becomes New Requirement for P2P Lending

The Financial Services Authority (Otoritas Jasa Keuangan/OJK) has finalized the amendment to Circular of OJK (Circular) No. 19/Circular.06/2023 on the Organization of Information Technology-Based Co-Funding Services (Layanan Pendanaan Bersama Berbasis Teknologi Informasi - “LPBBTI”). The regulations state that fintech peer-to-peer (P2P) lending (online lending) operators must ensure that collateral is available for online loans in the productive sector with a value exceeding Rp 2 billion.

“Actually, this is good because LPBBTI platforms can request collateral if they feel it is necessary from a risk management perspective. This is also common in banking, where all loan facilities must be collateralized,” said Tofan Saban, Chairman of the Productive Financing Cluster of the Indonesian Fintech Funding Association (Asosiasi Fintech Pendanaan Bersama Indonesia/AFPI), to Hukumonline.

The OJK is also developing a special scheme for credit insurance products for online lending platforms, by taking into account the level of risk that insurance can cover. This is based on Regulation of OJK No. 40 of 2024, Article 148 paragraph 8 on risk mitigation in financing through credit insurance or credit guarantees provided by fintech lending platforms.

“We have already provided our response; we are just waiting for the OJK’s policy to be officially announced,” concluded Tofan.