OJK Relaxes Multipurpose Financing Regulations

The Financial Services Authority (“OJK”) has taken a progressive step by revising a number of provisions in Regulation of the OJK (“Regulation”) in the areas of Financing, Venture Capital, Microfinance Institutions, and Other Financial Services Institutions (“PVML”). The deregulation will refer to several regulations, such as Regulation No. 58/Regulation.05/2020 (“Regulation 58/2020”) on the Amendment to Regulation of the Financial Services Authority No. 14/Regulation.05/2020 on the Countercyclical Policy to the Impact of the Outbreak of the Coronavirus Disease 2019 for Non-Bank Financial Services Institutions (“LJK”) and Circular of OJK No. 51/Circular.05/2017 on Registration, Business Licensing, and Organizational Structural for Pawnbroker Companies (“Circular 51/2017”).

“Some provisions in the Regulation are currently being reviewed to align with market needs,” said Agusman, the Executive Director of the OJK’s PVML Supervisory Agency, to Hukumonline.

In general, deregulation measures in the PVML industry are conducted to accommodate the growing demand for multi-purpose financing among the public. However, the OJK remains vigilant in its supervision to prevent the public from falling into excessive consumption that is prone to debt traps or loan defaults.

“The matter is still under review with relevant ministries/Agencies and market participants, whether to revise the previous Regulation or simply issue the Circular,” he added.