There has been a huge boom of P2P (peer-to-peer) lending apps in Indonesia in the past couple of years, but during all that time the industry has been largely unregulated which has led to allegations of incredibly unethical money lending practices.
But the government is finally making some important strides in regulating P2P lending in the country, starting with the ban of hundreds of apps after numerous reports emerged about abusive debt collecting methods in the past few months.
The Jakarta Legal Aid Foundation (LBH Jakarta) last week opened a channel for the public to make complaints about abusive debt collecting methods at the hands of P2P lending apps. LBH Jakarta says some of the reports they’ve already received included one in which collectors forced a woman to strip naked and dance on top of a train track to pay off her deb, as well as one case in which threats were made against a debtor’s life.
In addition, many collectors have been contacting people on the debtors’ contacts lists on their phones — which many of their apps questionably give them access to. In one case, one debtor lost his job after the collectors contacted his boss while in another case one debtor was threatened with divorce after the collectors contacted his in-laws.
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As reported by Okezone, the Information and Communications Ministry (Kominfo) on Tuesday said they have so far blocked access to 341 P2P lending apps that were not regulated by the Financial Services Authority (OJK) in a bid to prevent more unethical lending practices.
“The public should be aware of OJK’s list of legal fintech [apps] first. If there’s a problem [with an app] they can be summoned. If they’re not registered by OJK, then we can’t [hold them accountable],” Kominfo Director General of Applications and Information Samuel A. Pangerapan said.
OJK’s list of regulated fintech companies as of August 2018 can be seen here.
P2P lending has been burgeoning in Indonesia in recent years. This year, as of August 2018, fintech companies have given IDR11.7 trillion in loans (US$792 million) — a figure that is expected to reach IDR20 trillion by the year’s end.
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