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Bad loans, limited growth blight P2P lending business
P2P lending platforms want the OJK to massively increase the maximum ticket size for productive loans, which they hope will rekindle growth in the industry.
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Illustration of financial technology (fintech). (Shutterstock/File)
I
ndonesia’s person-to-person (P2P) lending platforms have been struggling to make their business case in an industry that was brought under Financial Services Authority (OJK) supervision in 2016.
Some have posted alarming delinquency rates, defined as the ratio of loans that are at least 90 days past due (TWP90) to total loans and roughly equivalent to the nonperforming loan ratio in banking, and some are even facing legal threats from their lenders.
Those that have kept their bad loan ratios relatively low, on the other hand, have expanded to other financial sectors, such as digital banking and multifinance, to boost lending growth and hit profitability.
Earlier this week, P2P lending firm Akseleran announced the start of an initial public offering (IPO) process it hopes will raise Rp 359 billion. The company plans to use the fresh funds to acquire multifinance firm PT Pratama Interdana Finance.
"We’re doing it right now as we got the opportunity to acquire a multifinance company – simple as that. We have been looking for [an acquisition target] since last year, and we finally got a firm that is relatively clean," Akseleran CEO Ivan Nikolas Tambunan said at a press briefing on Monday.
That same day, the OJK said one more P2P lender would go public this year, but it declined to disclose the name of the firm or what the funds would be used for.
Akseleran's move reflects a trend of P2P players looking beyond their core business.
