JAKARTA, INDONESIA — According to data from the Financial Services Authority (OJK), the number of active loan borrowers through online lending services in the Special Capital Region of Jakarta reached 2.38 million people as of April 2023.
This figure marks an increase from 2.34 million borrowers in March 2023. However, compared to April 2022, the number of active borrowers in Jakarta has declined from 2.67 million.
The outstanding loan amount as of April 2023 reached IDR 10.35 trillion (US$686.6 million), indicating a decrease of approximately 4.2 per cent from March 2023 when it was IDR 10.79 trillion.
However, compared to April 2022, the loan amount in Jakarta has increased, with the recorded figure being IDR 9.94 trillion (US$659.4 million).
Concerns have also arisen regarding the default rate or 90-day TWP (Troubled, Watchlist, and Problematic) loans in Jakarta, which stood at 2.94 per cent in April 2023. This represents an increase from 2.79 per cent in March 2023.
In addition to Jakarta, the highest number of online loan users in Java is found in West Java, which had 4.68 million borrowers as of April 2023.
However, this number has decreased compared to March 2023, when there were 4.81 million borrowers. Nevertheless, there has been an overall increase in borrowers from April 2022, which recorded 3.73 million users.
The loan amount in West Java reached IDR 13.57 trillion in April 2023, slightly higher than IDR 13.5 trillion in March 2023.
When compared to April 2022, the loan amount has significantly increased, as it was recorded at IDR 9.67 trillion. The 90-day TWP rate in West Java remained at 3.6 per cent in both April and March 2023.
Friderica Widyasari Dewi, the Commissioner of the Financial Services Authority (OJK) for Education and Consumer Protection, listed several reasons why people choose to use online lending services, often falling into the trap of illegal online loans.
These reasons include lenient requirements, fast disbursement of funds, the need to pay off debts, urgent financial needs, economic pressure, and educational expenses. However, there are also individuals who use online loans to fulfil lifestyle needs and engage in consumeristic behaviour, which is deeply regrettable.
Online lending services generally target individuals from lower to middle-income backgrounds, many of whom have low financial literacy when it comes to online loans.
According to Frederica, “28 per cent of the population cannot differentiate between illegal and legal online loans.”
Over the past two years, the Financial Services Authority (OJK) has received approximately 49,108 complaints related to illegal online loans and investment fraud.
These complaints range from mild to severe, including objections to high-interest rates and fines, difficulties in repayment, premature debt collection, disbursements not matching requests, and unresponsive loan providers.
Frederica explained that some of the more serious complaints include unauthorized disbursements, threats of personal data exposure, debt collection reaching all contacts in the borrower’s phone, and collection activities involving intimidation.
To address the issue, OJK has taken various measures to protect the public from illegal online loans, including:
- Strengthening preventive actions through continuous education and socialization, as well as reinforcing the Anti-Investment Fraud Task Force, which consists of 12 ministries and institutions responsible for preventing and handling illegal investments, including online lending.
- Collaborating with the Indonesian Ministry of Communication and Informatics to resend warnings about illegal online lending via SMS, strengthening cyber patrols, submitting requests to cease illegal online lending activities, and requesting application facilitators for illegal online lending to be blocked.
- Partnering with Google to tighten controls on the development of illegal online lending applications.
- Urging banks and Payment Service Providers (PJP: Perusahaan Jasa Pembayaran) to strengthen Know Your Customer (KYC) procedures and avoid collaborating with illegal online lending platforms.
- Enhancing supervision of legal fintech and Digital Financial Innovation (IKD; Inovasi Keuangan Digital) to prevent cooperation with illegal online lending platforms.
- Improving the effectiveness of complaint handling by providing channels such as complaints to OJK, the Investment Alert Task Force (SWI), AFTECH through the website https://fintech.id/id, and complaints to the Indonesian Fintech Lending Association (AFPI) through https://www.afpi.or.id/en/pengaduan.
- Publishing a list of legal fintech platforms and illegal online lending platforms.
- Reporting cases to the Indonesian National Police’s Criminal Investigation Department (Bareskrim Polri) for legal enforcement.
- Revoking licenses of legal IKD platforms that collaborate with illegal online lending and proposing criminal sanctions in the Draft Law on the Development and Strengthening of the Financial Sector (RUU PPSK; Rancangan Undang-Undang Pengembangan dan Penguatan Sektor Keuangan).
The Financial Services Authority (OJK) continues to emphasize the importance of consumer protection and urges the public to be cautious and well-informed when engaging with online lending services.
