Peer-to-peer lending bears risk of bad debt: Economist
The Jakarta Post
Despite the rising trend of peer-to-peer (P2P) lending in Indonesia, an economist believes that online-based businesses have increased risk of bad debt if the lenders ignore the importance of supervision.
The credit application mechanism in P2P lending is risky. There is no integrated costumer blacklist data-base like in the banking industry, said Samuel Aset Manajemen economist Lana Soelistianingsih said in Jakarta on Friday.
She said applicants for loans just presented their legal documents such as identity cards and vehicle ownership certificates to get loans.
"If you apply for a loan at banks or in pawnshops, they will hold your physical documents, but in P2P lending, we do not know whether or not the same scanned documents are being used for other loan applications," Lana said at the Indonesia Stock Exchange (IDX) building in Jakarta on Friday.Read also: Peer-to-peer lending needs big data to have a future
Moreover, she said P2P lending offered annual interest rates of up to 18.5 percent to investors, adding that such aggressive offers could increase the risk of business failure.
She also said the Indonesia Deposit Insurance Corporation (LPS) did not guarantee deposits in P2P lending and in addition to the risk, the data for P2P lending is not covered by the Financial Service Authority (OJK).
"This is a risky business and unfortunately our people love risky things. The OJK must regulate this soon," she said. (bbn)
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