Indonesian Citizens' Loan Debt Reached IDR74 48 T As Of September 2024

Tuesday, 12 Nov 2024

By deriz@insightinnews.com The Financial Services Authority (OJK) has reported that the total financing from Technology-Based Peer-to-Peer Lending Services (LPPBTI), commonly known as online loans, reached IDR 74.48 trillion as of September 2024. "As of September 2024, the outstanding funding in the LPPBTI sector increased by 33.73 percent year-on-year, amounting to IDR 74.48 trillion. Of this funding, institutional lenders contributed 89.98 percent, while individual lenders accounted for 10.02 percent," stated Agusman, the Head of Supervision for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services in an official statement on Wednesday, November 6. Agusman noted that this growth reflects a rising participation from lenders in the online loan industry. During the same period, the industry's profits surged by 66.15 percent year-on-year, reaching IDR 806.05 billion. This increase in profit is attributed to a rise in operational income. Furthermore, by the end of the third quarter of 2024, there were 22 LPPBTI providers with a TWP90 rate exceeding 5 percent. TWP90 is a measure of default or negligence in fulfilling obligations stated in agreements that are over 90 days past due. "In response to these providers, OJK has issued warning letters and requested them to develop action plans to enhance the quality of their funding. OJK will continue to monitor the quality of LPPBTI funding and will take supervisory actions, including the imposition of administrative sanctions if any violations of regulations are identified," he explained. To enhance the role of online lending and financing companies, the Financial Services Authority (OJK) has launched the LPBBTI Roadmap for 2023-2027 and the Financing Company Roadmap for 2024-2028. The online lending and financing sectors are encouraged to increase funding for productive sectors, including micro, small, and medium enterprises (MSMEs). This includes raising financing limits for productive sectors and limiting economic benefits (interest rates), while also emphasizing collaboration with financial service institutions, MSMEs, and related priority economic sectors. Furthermore, online lending providers have been urged to improve accessibility, financial inclusion, and the empowerment of MSMEs as fundamental considerations in the development of their 2025 Business Plans. "OJK will continue to promote the development and strengthening of the LPBBTI industry in the future to ensure greater integrity and gain public trust," he stated.

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