OJK Eases Threshold for Classifying Pindar Financing as Non-Performing to 180 Days

The Financial Services Authority (“OJK”) will revise the threshold for classifying funding under Information Technology-Based Joint Funding Services (Layanan Pendanaan Bersama Berbasis Teknologi Informasi -“LPBBTI”), also known as online lending (Pinjaman Daring - “pindar”), as non-performing, extending the applicable period from payment delays exceeding 90 days to those exceeding 180 calendar days. This adjustment forms part of the planned amendment to OJK Regulation (POJK) No. 40 of 2024, which is targeted for completion before the end of 2026.

Agusman, OJK’s Chief Executive for the Supervision of Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions, stated that the revision of the threshold for classifying funding as non-performing is intended to strengthen the resilience of the pindar industry while aligning the regulatory requirements with the evolving structure of funding.

“The extension of the threshold for classifying funding as non-performing to more than 180 calendar days is intended, among other things, to align the applicable requirements with the collectibility classification rules in the banking sector, which accounts for the majority of institutional lenders in the pindar industry. This change is expected to facilitate more effective funding quality management and integrated supervision,” Agusman stated.

This adjustment takes into account the dominant role of institutional lenders, particularly banks, in the pindar industry. Banks generally provide funding through channeling and joint financing schemes.

Under these circumstances, the differing time thresholds for classifying funding as non-performing in the pindar and banking industries may create challenges in aligning contractual arrangements and prudential reporting.