The OJK issued a regulation last December on IT-based money lending services, which stipulates that fintech firms involved in peer to peer (P2P) lending businesses must apply for operational permits within six months. Otherwise, they will be considered to be carrying out illegal activities.

The regulation also requires P2P companies with on-balance sheets, namely those collecting third-party funds, to switch their business models to an off-balance sheet one, with which they can only act as intermediary lenders to their end customers and therefore, are barred from collecting funds directly, like banks.

As many as 27 fintech companies with P2P lending and crowdfunding schemes have already applied to the OJK for permits as of March, according to the Indonesian Fintech Association (AFTECH Indonesia). However, the group claims that nearly all have yet to receive confirmation about the permit application despite getting confirmation about receipts of their submitted documents.

As the clock is ticking toward the deadline for the permit application in June, P2P players see no significant progress made by the financial regulator to expedite the process. Furthermore, they cannot access technical information easily.

The OJK, meanwhile, is in the selection process to choose its new commissioners.

“These issues have put industry players in a complicated situation, and they have also affected companies’ performance while the demand for such [lending] businesses is growing,” AFTECH Indonesia vice chairman Adrian Gunadi recently said.

Adrian was aware that the OJK would soon see a major change as it was selecting its new commissioners. He also believed that future OJK officials would be supportive to the domestic fintech industry.

At present, there are at least 157 start-up fintech companies operating in Indonesia with a total transaction of US$18.64 billion, according to data at research firm Statista.

Of the figure, 70 P2P lenders are members of AFTECH Indonesia.

The lenders have so far disbursed approximately Rp 300 billion and some companies have managed to book an average of Rp 20 billion to Rp 30 billion each month, according to the association.

There are also about Rp 1 quadrillion of potentially ready loans untapped by banks and the financial industry nationwide, the group claims.

Some P2P players have been planning for business expansion to regions outside Jakarta.

Adrian further called for the OJK to build a specific division to be in charge of the fintech industry to ensure that business players got the former’s full support.

“With growing potential in the future, we have to anticipate the possibility of foreign players coming to the domestic P2P market. We need to work together with the regulator to raise public awareness on this issue,” Adrian said.

Separately, OJK deputy commissioner for non-banking supervision Edy Setiadi said his office had officially registered one P2P lender and was currently processing 23 others.

As many as 12 firms were still in talks with the OJK, he added.

Edy also said the OJK would ensure that business players currently processing their permits would be confirmed by June.

“We will work together with the Communications and Information Ministry to see whether these fintech firms are eligible and have applied standardized technology,” he said.

There are 600 fintech firms operating in Indonesia at present, according to OJK’s estimation.

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