The Financial Services Authority (OJK) reported a significant increase in non-performing loans (NPLs) for over 90 days from fintech P2P lending platforms. As of October 2022, the NPLs had risen to IDR 1.42 trillion (US$ 95.3 million), a 140.78% increase from from the previous year of IDR 593.44 billion.
The rise in NPLs has raised concerns over the stability of the fintech lending sector in Indonesia and highlights the need for increased regulatory oversight to protect both borrowers and lenders.
The OJK has closely monitored 18 fintech startups as they recorded over 5% NPLs until the end of 2021. The figure increased from January to September 2022.
Fintech with highest number of loans’ problems
This is the list of fintech with the highest number of loans’ problems:
Cases of illegal online loans
According to a report by the OJK, the number of complaints over the online loans between 2019 and 2021 reached 19,711. The complaints included:
- Disbursement without the consent of the applicant
- Threat of sharing personal data
- Billing to all mobile phone contact numbers with terror/intimidation
- Abusive and sexual harassment billing
The OJK said that illegal online loans in Indonesia has decreased over the past four years. The Investment Alert Task Force (SWI) has successfully reduced the number of these illegal loans from 2019 to September 2022. The authority has conducted “cyber patrols” regularly. Since 2018, it has blocked or closed 3,516 illegal online loan (pinjol) applications/websites.
Despite the SWI’s achievements, there are still many online loan cases in the society. Here are some examples of such cases:
- A teacher at an elementary school in Semarang regency was shocked to learn that her debt from online loans has accumulated tremendously. She initially borrowed only IDR 3.7 million, but the amount that she owed escalated to IDR 200 million
- In November 2022, 121 students of the Bogor Agricultural University (IPB) became victims of a scam disguised as an online sales collaboration. This incident led to their entanglement in illegal online loans.
Many individuals from middle to lower income groups in Indonesia are falling prey to illegal online loans. These loans often come with exorbitant interest rates and hidden fees, trapping borrowers in a cycle of debt.
Prevention to online loan scams
The lack of financial literacy and access to traditional lending sources can make individuals in these income groups vulnerable to these types of scams. As a result, they may find themselves unable to repay the loans and facing financial difficulties.
The OJK has repeatedly asked the public to be wary of online loans via SMS/WhatsApp because they offer illegal loans. The authority also urges the public to only use online loans officially registered/licensed by OJK and to always check the legality of loans to contact 157/ WhatsApp 081157157157.
