AFPI chair Adrian Gunadi told journalists on Wednesday that the task force would help companies improve the 90-day success loan settlement rate (TKB90) and reduce the bad loan rate by improving their risk management.

“We will explore strategies to improve [loan] collection and to collaborate with credit insurance [companies] and other supporting third parties,” Adrian said during an online press conference.

According to AFPI data, Indonesian P2P fintech firms saw the proportion of bad loans rise to 7.99 percent in July, up from 4.22 percent in March. The March figure was already a significant increase from the 2.62 percent in March of 2019, according to data from the Financial Services Authority (OJK).

The AFPI has attributed the rise in bad loans to the impact of COVID-19 on borrowers’ income.

Read also: Fintech lenders struggle to get back money, bad loan ratio reaches 7.9%

Furthermore, OJK fintech management, surveillance and licensing director Tris Yulianta said fintech lenders’ TKB90 rate continued to falter during the course of the pandemic, showing an increased risk of credit insolvency.

According to OJK data, the TKB90 rate of 158 registered P2P fintech lending platforms was 92 percent in July, down from 93.8 percent in June and 94.9 percent in May.

“The TKB90 rate has been in decline since April, and currently stands at around 91 percent. Therefore, we urge all [P2P] platforms to improve their credit scoring quality, risk management and the ‘know-your-customer’ [KYC] system,” he said during the press conference.

Tris said the agency had issued notices and had summoned fintech lending platforms with bad loan rates above 8 percent, demanding that the companies create action plans to reduce their bad loans.

“We’ve discussed with the companies how to reduce their bad loan rate and have required them to improve their risk mitigation, while consistently monitoring their development. Alhamdulillah [Thank God], some of the companies have shown results that are beyond their action plans,” he said.

He added that the OJK was shifting its focus on issues surrounding the fintech lending industry from the platforms’ rapid growth to the quality of its loans and its contribution to the economy.

P2P lenders had disbursed Rp 116.97 trillion (US$7.86 billion) in loans this year as of July 2020, more than double the Rp 49.79 trillion issued over the corresponding period last year, OJK data shows.

While the industry continues to see rising loan disbursement, a recent survey shows that the lenders could be struggling with risky loans as they had turned down more than half of the loan restructuring requests from borrowers.

According to AFPI data, only 34 percent of the 1.96 million restructuring requests that were received by 88 P2P lending platforms in May were granted by their lenders.

In May, borrowers requested restructuring for a total of Rp 1.08 trillion in loans. Just Rp 236.9 billion of that figure was approved by lenders.

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