Indonesia halts license issuance for fintech lenders to rein in digital loan sharks

Indonesia’s President Joko Widodo on October 15 ordered to halt license issuances for financial technology companies whose business entails digital lending to consumers and small companies, Bloomberg News reported.

The move comes as it turned out that a number of illegal businesses went online to trap individual lenders and small firms with high-interest loans.

The government would take firm action against such illegal online lending practices through police intervention, the report said.

Indonesia has to deal with the problem that – while there is a fair share of legit online lending businesses operating in the country, mainly in the crowd and peer-to-peer lending segment –  a rising number of loan sharks has been jumping on the bandwagon to lure mainly unbanked people to take out high-interest loans via the Internet.

More than 1,800 illicit lending portals

Currently, there are 107 fintech lending companies registered with Indonesia’s Financial Services Authority. So far this year, authorities have shut down more than 1,800 unlicensed fintech lenders that exist online and as social media applications. A total of 4,875 illegal loan accounts have been blocked by the government since 2018, the authority said.

Widodo asked regulators to improve the governance of the entire fintech lending business, which has granted around 260 trillion rupiah ($18.5 billion) in loans to more than 68 million people so far. Tightened regulations are also crucial to limit risks for the fast-growing sector.

Fast booming sector expected to reach nearly $9 billion by 2025

Despite those troubles, fintech activity is generally accelerating in Indonesia, a trend marked by significant startup venture capital rounds, accelerated growth of local fintech startups and increased participation of foreign companies in the domestic market.

Being the most populous country and largest economy in Southeast Asia, Indonesia’s booming e-commerce market is projected to surpass $43 billion this year, while its digital financial services sectoris expected to soar at an annual growth rate of 34% to reach $8.6 billion by 2025, according to the e-Conomy SEA 2020 report by Google, Temasek and Bain & Company.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

Indonesia’s President Joko Widodo on October 15 ordered to halt license issuances for financial technology companies whose business entails digital lending to consumers and small companies, Bloomberg News reported. The move comes as it turned out that a number of illegal businesses went online to trap individual lenders and small firms with high-interest loans. The government would take firm action against such illegal online lending practices through police intervention, the report said. Indonesia has to deal with the problem that – while there is a fair share of legit online lending businesses operating in the country, mainly in the crowd...

Indonesia’s President Joko Widodo on October 15 ordered to halt license issuances for financial technology companies whose business entails digital lending to consumers and small companies, Bloomberg News reported.

The move comes as it turned out that a number of illegal businesses went online to trap individual lenders and small firms with high-interest loans.

The government would take firm action against such illegal online lending practices through police intervention, the report said.

Indonesia has to deal with the problem that – while there is a fair share of legit online lending businesses operating in the country, mainly in the crowd and peer-to-peer lending segment –  a rising number of loan sharks has been jumping on the bandwagon to lure mainly unbanked people to take out high-interest loans via the Internet.

More than 1,800 illicit lending portals

Currently, there are 107 fintech lending companies registered with Indonesia’s Financial Services Authority. So far this year, authorities have shut down more than 1,800 unlicensed fintech lenders that exist online and as social media applications. A total of 4,875 illegal loan accounts have been blocked by the government since 2018, the authority said.

Widodo asked regulators to improve the governance of the entire fintech lending business, which has granted around 260 trillion rupiah ($18.5 billion) in loans to more than 68 million people so far. Tightened regulations are also crucial to limit risks for the fast-growing sector.

Fast booming sector expected to reach nearly $9 billion by 2025

Despite those troubles, fintech activity is generally accelerating in Indonesia, a trend marked by significant startup venture capital rounds, accelerated growth of local fintech startups and increased participation of foreign companies in the domestic market.

Being the most populous country and largest economy in Southeast Asia, Indonesia’s booming e-commerce market is projected to surpass $43 billion this year, while its digital financial services sectoris expected to soar at an annual growth rate of 34% to reach $8.6 billion by 2025, according to the e-Conomy SEA 2020 report by Google, Temasek and Bain & Company.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

NO COMMENTS

Leave a Reply