Government Tightens Online Lending Regulations for Consumer Protection

Draft Regulation of the Government (Rancangan Peraturan Pemerintah – “RPP”) on the Implementation of Online Loans (Pinjaman Dalam Jaringan – “Pindar”). Head of the Legal Bureau of the Ministry of Communication and Digital Affairs (Kementerian Komunikasi dan Digital – “Komdigi”), Radita Aji explained that the preparation of this regulation is a form of response to the development of the digital ecosystem. Moreover, in recent years, there have been many unethical debt collection, data leaks, and illegal fintech practices.

"The crucial aspect in this draft RPP is directed at ensuring a technology-based financing system that is inclusive, fair, and supports consumer protection, starting from the procedures for providing loans to the collection mechanism," Radita told Hukumonline.

Komdigi also provided a number of inputs related to the substance of the regulations to be regulated, including, the obligation to be transparent, both in terms of service information, interest, fines, and risks that must be clearly known to users, to the mechanism for protecting personal data of service users. These are included in periodic security audits of the operational system of the fintech platform, as per the Decision of the Supreme Court (Mahkamah Agung/MA) No. 1206.KP/Pdt/2024 (“Decision 1206/2024”) which regulates Peer-to-Peer (P2P) Lending.

“Still being discussed with the Inter-Ministerial Committee (Panitia Antarkementerian/PAK),” he added.