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OJK imposes cuts on P2P interest rates, fees starting next year
The circular from OJK also regulates which borrowers P2P lenders can approve, as well as the debt-collection process.
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A man walks past the Financial Services Authority (OJK) building in Central Jakarta on May 15, 2013. Critics have called on the OJK to improve its oversight of the country’s financial services industry. (Tribunnews/Herudin)
T
he Financial Services Authority (OJK) has decided to cap interest rates and service fees that peer-to-peer (P2P) lending platforms can charge borrowers, starting next year, according to the institution’s circular No. 19/2023.
The OJK said that the combined percentage value of interest rate and service fees, which it called “financial benefits”, could not exceed 0.3 percent per day for consumer loans starting in 2024.
The authority will lower the cap to 0.2 percent per day in 2025 then set it at 0.1 percent per day in the following year.
Read also: P2P lenders should cut risks to bring down rates, analysts say
All P2P loans that had been disbursed before the circular was signed on Oct. 8, can still refer to the prevailing regulations.
Currently, P2P lending platforms can charge borrowers up to 0.4 percent per day, a figure based on the Code of Conduct from the Indonesian Fintech Lenders Association (AFPI).
The OJK issued the cap, following scrutiny from the Business Competition Supervisory Commission (KPPU), which received complaints from the public about their experiences using the platforms, as well as alleged interest rate manipulation among P2P lending firms.
