Heaptalk, Jakarta — Indonesia’s Financial Service Authority (OJK) has issued the latest regulation regarding the reduction of economic benefits or interest on fintech Peer-to-peer (P2P) lending or online loans.
As stipulated in the OJK Circular Letter (SEOJK) No.19/SEOJK.06/2023 concerning the Implementation of Information Technology-Based Joint Funding Services (LPBBTI), OJK requires that the maximum interest on online loans for the consumptive sector be reduced to 0.3% and productive sector to 0.1% which has been effective on January 1st, 2024.
According to the Chief Executive for Supervision of Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions at the OJK, Agusman delivered the online loan interest regulations, expecting to protect consumers. Based on his perspective, this issue must be well managed to avoid loss problems, such as predatory pricing.
In his further statement, The amount of interest on online loans for the consumptive and productive sectors will be separated. The consumer sector refers to pay later or cash loans for education and health purposes, while the productive sector includes loans to MSMEs.
As is well known, this circular letter regulates the determination of maximum limits on economic benefits and late fines based on the type of funding for the productive and consumer sectors, which will be implemented gradually and is expected to be completed in 2026.
In more detail, the economic benefit for productive funding is set at 0.1% per calendar day of the funding value stated in the funding agreement, effective January 2024. Then, OJK will decrease the maximum interest limit for online loans in the productive sector to 0.067% per day, effective in 2026.
Regarding the consumptive sector, the SEOJK letter also imposes a reduction in the interest on consumer loans to 0.3% per calendar day of the funding value stated in the agreement, which prevailed on January 1st, 2024. Interest on consumer loans will also be diminished to 0.2% as of January 2025 and will eventually decrease to 0.1% as of January 2026.
Indonesia’s OJK also regulates retardation fines for the productive sector to reach 0.1% per day in 2024 and decrease to 0.067% in 2026. Meanwhile, the retardment fines for the consumptive sector have been minimized by up to 0.3% per day in 2024 and reduced to 0.2% in 2025. Also, the fines retardation for this sector will descend to 0.1% in 2026.
“To protect the consumer significance, overall economic benefits and the retardation fines that may be imposed cannot exceed 100% of the funding value stated in the funding agreement,” added Agusman.
