Indonesia: Peer-To-Peer Lending In Indonesia: A Regulatory Update

Last Updated: 30 May 2019
Article by Greita Anggraeni
Most Read Contributor in Indonesia, August 2019

In February of this year, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan  or "OJK") issued an updated checklist for peer-to-peer lending ("P2P lending") platform providers ("Checklist") registering with the OJK or applying to the body for a business license or change of ownership. The new Checklist introduces several changes to the previous checklist issued in October 2018. We highlight the key material changes and new requirements introduced by the Checklist.

Choice of Name for P2P Companies

The Checklist imposes a new restriction on the choice of name for P2P companies. P2P companies are no longer allowed to use the words money (uang), rupiah, cash, installment (cicilan), express (kilat), fast (cepat), bank, investment (investasi), cooperative (koperasi), finance, fund (dana), credit (kredit), money (duit), pledge (gadai), cash (kas) or savings (tabungan) in their name.

While it is clear in the Checklist that this restriction applies to a P2P company's name, it is unclear whether the same restriction applies to brand names, as the two may be different. We do believe, however, that the OJK is likely to impose the same restriction on brand names. However, given the uncertainty, new investors should seek confirmation from the OJK - either through a courtesy meeting or a letter of intent - before proceeding to establish a P2P company.

Indonesian Fintech Association Requirements

Following the official acknowledgment of the Indonesian Fintech Association (Asosiasi Fintech Pendanaan Bersama Indonesia or "AFPI") by the OJK in March 2019, there are several AFPI-related requirements that P2P companies must now fulfill. We highlight a few of the main requirements below.

To register with the OJK, a P2P company must provide proof of membership with and a recommendation from the AFPI, which must at least include: (i) undertaking that the P2P company will comply with all the provisions in the AFPI's code of ethics; and (ii) the qualifications of and an AFPI-issued certification of competence in the field of financial technology for the members of the boards of directors and commissioners of the P2P company, as well as the company's shareholders.

When applying for a business license, the P2P company must provide proof of membership with and a recommendation from the AFPI. This recommendation must at least include: (i) a statement that the P2P company has never been sanctioned by the AFPI for an ethics violation; (ii) a pledge to comply with the AFPI's code of ethics and all related commitments; (iii) proof that the P2P company has a data center that can be readily connected with the data centers of the AFPI and the OJK; and (iv) the qualifications of and an AFPI-issued certification of competence in the field of financial technology for the members of the boards of directors and commissioners of the P2P company, as well as the company's shareholders.

If a P2P company that is applying for a business license cooperates with third-party collector(s), the collector(s) must be certified by the AFPI.

Interview Requirement

The Checklist stipulates that for both the registration and business license phase, the directors, commissioners and shareholders of a P2P company will be interviewed by the OJK. OJK officials and industry players have referred to this interview in various forums as a "fit and proper test." However, a formal regulation specifically governing a fit and proper test for P2P companies has not been issued, unlike for other finance service companies, such as multi-finance companies, for which regulations on fit and proper tests are already in place.

Other Key Changes

The Checklist introduces a number of other key changes that should be noted by P2P companies. First, a P2P company can only enter into a cooperation with a credit information management institution that has obtained a license from the OJK. There was no such requirement in the previous checklist, but is included in the new Checklist for business license applications.

Second, also for business license applications, the Checklist appears to require P2P companies to have an agreement to mitigate the credit risk of lenders and borrowers, for example, entering into an agreement with a credit insurance provider.


The P2P industry in Indonesia appears set to continue its growth as more foreign and domestic investors enter the market. These investors should be ready to respond to a dynamic regulatory framework, as the OJK continues to update its Checklist periodically. In addition to the changing Checklist, even greater changes could be in store with the OJK planning to issue a new OJK regulation to replace the current POJK 77 /POJK.01/2016 on P2P lending services. It is still unclear when the new regulation will be issued, but it is expected to introduce stricter requirements for companies involved in the P2P lending sector.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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