An official at Indonesia’s Information and Communications Ministry (Kominfo) has offered a solution for those who owe money to illegal P2P lending services — an issue which has been thrust into the spotlight in recent weeks — but it may strike some as a rather risky and irresponsible one.
As reported by Kontan, Kominfo Director General of Applications and Information Samuel A. Pangerapan said people who have borrowed money from P2P lending apps not registered with the Financial Services Authority (OJK) don’t have to worry about paying the money back because the apps are essentially illegal.
“So the borrower can borrow as much as they like if the lender is not official. Don’t repay [the loan] because they’re illegal,” Samuel said yesterday.
“So if a fintech [service] comes to collect the debt, report them. The relevant authorities will arrest them because they’re unlicensed.”
Even though this advice came from a high ranking ministry official, we’re not sure following it is the safest thing to do. Recently, there have been numerous reports of unethical and downright abusive debt collecting methods employed by illegal P2P lenders. One woman claimed she was forced to strip naked and dance on top of a train track to pay off her debt, while in another case threats were made against a debtor’s life.
Kominfo this month blocked 341 illegal P2P lending apps following an increase in reports of unethical lending practices. As of October, 73 P2P lenders were officially registered with the OJK, the list of which you can see here.
The P2P lending market 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.
But startups providing P2P lending services may soon have to face huge competition as major banks, including BNI, are moving into the lucrative online loan market.