Indonesia eyes tighter fintech regulations to curb loan shark activity

Fintech firms will be compelled to be registered with authorities.

Bloomberg reports that the Indonesian Financial Services Authority (Otoritas Jasa Keuangan) is set to issue new rules by June requiring fintech firms to be registered with authorities in an effort to promote greater transparency and safeguard borrowers against unregulated borrowing.  

Unregistered companies will not be allowed to tap financial markets or raise money from banks, said Nurhaida, vice chairman of OJK, especially since the 44 formally recognised fintech players in Indonesia are able to reach the country’s unbanked population due to extensive internet and smartphone penetration.

Also read: Indonesia makes headway in curbing unbanked population

Peer-to-peer lending jumped 38% YoY in the first two months of 2018, hitting $250.32m (3.5t rupiah). Left unregulated OJ director Eko Ariantoro expressed concern that P2P lending businesses may take advantage of borrowers and become “loan shark-lie businesses.”

Minimum requirements already proposed for banks and their fintech partners include core capital of at least $70m (1t rupiah) and satisfactory risk ratings.

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