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Jakarta Post

Fintech non-performing loans under control, financial authority says

  • News Desk

    The Jakarta Post

Jakarta   /   Mon, October 22, 2018   /   10:52 am
Fintech non-performing loans under control, financial authority says An illustration of peer-to-peer lending that uses financial technology. (Shutterstock/File)

The Financial Services Authority (OJK) said the non-performing loans (NPL) rate among financial technology (fintech) firms that use peer-to-peer lending (P2P) hovered around 1 percent monthly, safely below the 2 percent maximal set by the OJK.

“The NPL rate can go as low as 0.9, then rise as high as 1.3 then go down again,” said OJK fintech licensing and supervision director Hendrikus Passagi on Sunday as reported by kompas.com.

Hendrikus attributed the fluctuation to the emergence of new fintech lenders every month who, having less experience, did not manage NPLs as efficiently as older lenders.

“But new lenders learn quickly and their NPL rates drop again within three months,” he said.

He added that the OJK required all registered fintech firms to regularly report their NPL rate to his organization, to be used as a performance indicator of the industry even if higher NPL rates were not as “relevant” to P2P-based fintech firms as compared to banks, for whom the NPL limit is 5 percent.

Fintech NPL transparency and compulsory registration are just two examples of the regulations enforced by the OJK since 2016 to protect Indonesian consumers against fraudulent fintech firms.

In a testament to the explosive growth of fintech in Indonesia, the OJK predicts the amount of fintech-distributed funds will almost triple to Rp 20 trillion (US$1.31 billion) by December from just Rp 7 trillion in June. (nor)