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OJK Renames Pinjol To Pindar: New Strategies For Identification And Challenges Ahead
Wednesday, 18 Dec 2024
The Financial Services Authority (OJK) has introduced a new term, "pindar," to replace "pinjol" for referring to legally licensed Technology-Based Peer-to-Peer Lending Services (LPBBTI). This change aims to help the public easily identify fintech peer-to-peer lending providers that are authorized by OJK. Agusman, the Executive Head of Supervision for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services at OJK, stated that this name change is intended to enhance user comfort with LPBBTI services. He mentioned, "With this branding distinction, it is hoped that the public can more easily identify which providers are legal," on Tuesday (December 17, 2024).
This initiative is also expected to strengthen governance, risk management, and compliance with existing regulations. As of October 2024, the fintech lending industry reported a profit of IDR 1.09 trillion, up from IDR 806.05 billion in September 2024, due to operational efficiency. However, OJK noted that there are still 19 providers with a problematic credit rate (TWP90) above 5 percent as of October 2024, although this number has decreased from 22 in the previous month. Consequently, OJK has issued warning letters and requested action plans for improvement from these providers.
The name change has received mixed reactions. Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (Celios), believes that changing the name will not have a significant impact unless the underlying issues in the industry are addressed. "If the core problems, such as short-term consumer credit, high interest rates, and unethical collection practices, are not resolved, this is merely a euphemism," Bhima told Kompas.com. He also emphasized the need to focus on eradicating predatory lending practices disguised as online loans and imposing strict penalties on violators.
He assesses the losses experienced not only from the borrower's perspective but also from the lender's side. Similar to Bhima, Nailul Huda, the Director of Digital Economy at Celios, believes that the term "pinjol" has become too familiar in society, so changing the name to "pindar" may not have a significant impact. "Pinjol is already easy to say and widely recognized, even though it has a negative connotation. On the other hand, while 'pindar' is simpler than the term fintech peer-to-peer lending, it will still take time to gain widespread recognition," Nailul explained. He added that positive branding must be supported by improved governance. "If the performance of the providers is poor, the name 'pindar' could also carry a negative connotation like 'pinjol'," he said.
Fintech Lending Industry Performance According to OJK data, the outstanding financing for fintech lending reached Rp 75.02 trillion in October 2024, growing by 29.23 percent compared to the same period last year (Year on Year/YoY). The aggregate non-performing loan risk rate, or TWP90, was recorded at 2.37 percent, still below the established threshold. This name change is part of OJK's efforts to create a positive image for the fintech lending industry amid various challenges. However, strengthening governance and addressing fundamental issues remain key to ensuring the sustainability and public trust in these services.