Government Prepares Legal Framework for Online Lending, Here are the Guidelines

The government continues to prepare Draft Regulation of the Government (“Draft Regulation”) on the Organization of on Online Lending (“Online Lending”). Acting Head of the Department of Financial Literacy, Inclusion, and Communication at the Financial Services Authority (Otoritas Jasa Keuangan - “OJK”) M. Ismail Riyadi explained that the regulation will stipulate the qualifications of Online Lending organizers and the mechanisms for protecting potential borrowers.

“It is emphasized that organizers conducting Online Lending activities must be in the form of a Limited Liability Company (Perseroan Terbatas - “PT”) or a cooperative. This aims to prevent the emergence of Online Lending organizers operating without proper authorization,” Ismail told Hukumonline.

Furthermore, the provisions of this Draft Regulation are intended to ensure the legality and accountability of fintech operators, particularly Peer-to-Peer (“P2P”) Lending which are within a clear legal framework. Strengthening personal data protection and increasing supervision are also key focuses in the preparation of this Draft Regulation.

“So far, it is still under discussion between ministries/institutions.”