The Financial Services Authority (OJK) is seeking to maintain the growth momentum of Indonesia’s peer-to-peer (P2P) lending sector, or online lending (pindar), by ensuring balanced benefits for both lenders and borrowers, even as the industry faces challenges from illegal lenders, loan default communities, and fraud schemes.

Digital economy researchers at the Center of Economic and Law Studies (CELIOS) warned that setting interest rates requires a delicate balance.

“Rates must be affordable to attract borrowers, yet proportional to credit risk so lenders get fair returns,” CELIOS researcher Rani Septyarini said on Monday, August 11, 2025.

She noted that rates that are too low could undermine platform sustainability, reduce liquidity, and push borrowers toward illegal lending practices.

CELIOS director Nailul Huda highlighted that online lending has widened access to finance, particularly for small businesses and individuals excluded from formal banking.

“Many micro, small, and medium enterprises (MSMEs) struggle with collateral requirements. P2P lending offers a faster, collateral-free, app-based alternative,” he said.

For lenders, Huda added, the platforms offer annual returns of up to 15–20 percent far above bank deposits but with higher default risks.

Another CELIOS researcher, Dyah Ayu, urged regulators to adopt risk-based rate setting while maintaining investor appeal and consumer protection. She called for strengthened enforcement against illegal lending, fraud, and “loan default” communities, alongside improving financial literacy to prevent over-indebtedness.

Meanwhile, the Indonesian Joint Funding Fintech Association (AFPI) responded to the Business Competition Supervisory Commission’s (KPPU) planned trial over alleged interest rate cartel practices in the online lending (pinjol) industry. The first hearing is scheduled for August 14, 2025 to present the investigator’s report.

AFPI chairman Entjik S. Djafar said the association respects the legal process but rejects claims of collusion, stressing that interest rate guidance was in line with OJK’s consumer protection directives.

“We never intended to fix rates unfairly. The aim is to protect consumers from excessive rates. If anyone wants to offer cheaper or even free loans, they are free to do so,” he said.

Entjik added that AFPI has explained its position to KPPU and maintained communication, with OJK also issuing an official letter to clarify the basis of interest adjustments.