Indonesia: revamping the peer-to-peer lending industry


In short

To keep up with the momentum of digitized lending and address the multitude of aspects (including financial inclusion and consumer protection) impacted by this ever-increasing practice, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan Where OJK) finally released the long-awaited regulation that revamped OJK Regulation No. 77/POJK.01/2016 on IT-Based Lending Services (POJK 77). On July 4, 2022, the OJK issued Regulation OJK No. 10/POJK.05/2022 on Information Technology-Based Crowdfunding Services (POJK 10), updating the requirements for peer-to-peer lending operators (P2P operator) and repeals POJK 77.

1. Capitalization and equity

The minimum paid-up capital requirement under POJK 10 is now IDR 25 billion, which is a significant increase from the previous requirements of IDR 1 billion (for the registration phase) and 2. IDR 5 billion (when applying for a (permanent) license) under POJK 77.

Any P2P operator that obtained an OJK license (or is in the process of obtaining a license) prior to the enactment of POJK 10 would be grandfathered and would not be subject to the new capitalization requirement.

In addition to the minimum paid-up capital requirement, POJK 10 now also requires P2P operators to maintain capital of at least IDR 12.5 billion at all times. The realization of this capital requirement can be done according to the following tranches:

  • At least IDR 2.5 billion within one year of the promulgation of POJK 10.
  • At least IDR 7.5 billion within two years of the promulgation of POJK 10.
  • At least IDR 12.5 billion within three years of the promulgation of POJK 10.

2. Controlling shareholder and single presence policy

Consistent with the regulatory regimes of other types of financial institutions, POJK 10 now recognizes the concept of majority shareholder of a P2P operator. POJK 10 defines controlling shareholder as any legal entity, natural person and/or group of companies holding 25% or more of shares in a P2P operator or holding less than 25%, but of which there is evidence that the shareholder exercises effective control, directly or indirectly. Now, P2P operators must nominate/indicate at least one majority shareholder (similar to banking regime requirements).

P2P operators who obtained OJK licenses before the enactment of POJK 10 must notify the OJK of their controlling shareholder(s) within six months of the date of enactment of POJK 10.

Similar to the single presence policy in banking, under POJK 10, a majority shareholder of a P2P operator cannot be a majority shareholder of more than one conventional P2P operator or one Shariah-based P2P operator.

3. Fit and Proper test approval

Similar to the regulatory regimes of other types of financial institutions, POJK 10 now requires that potential principal parties of a P2P operator (i.e. majority shareholder, board members, members Board of Commissioners and members of the Shariah Supervisory Board) to undergo OJK’s Fit and Suitability Test (FPT) and to be approved by the OJK. Prospective main parties are not allowed to perform their functions and duties until they have passed the FPT and obtained this approval from the OJK. POJK 77 did not previously require this FPT requirement for core parts of a P2P operator.

Current major parties of a P2P operator who held their positions prior to the enactment of POJK 10 would be grandfathered until terms are extended (in the case of board members, board members commissioners and members of the sharia supervisory board) or in the event of a change of controlling shareholder.

4. Pre-approvals for corporate actions

POJK 10 expands the pre-approval requirements that a P2P operator must obtain before undergoing any of the following corporate actions:

  • Change of ownership
  • Increase in paid-in capital
  • Change of Board Members, Board of Commissioners Members and Sharia Supervisory Board Members
  • Merger or consolidation

In relation to point a) above on change of ownership, POJK 10 also introduces a “blocking” period where a P2P operator is prohibited from having new shareholders and changing majority shareholder for a period three years following issue. of the P2P operator license of the OJK.

5. Legal loan limit

As regulated in POJK 77, the lending limit to a borrower from a P2P operator is capped at IDR 2 billion. POJK 10 retains this lending limit and adds that each lender (pemberi dana) (and Lender Affiliates) of a P2P Operator may only provide funding to that P2P Operator up to a maximum of 25% of the P2P Operator’s final loan position at the end of each month. Compliance with this cap applicable to lenders (and lender affiliates) of a P2P operator could be done in stages. Lenders of a P2P operator that engages in the financial services sector supervised by the OJK are exempt (capped at 75% vs. 25%).

6. Sharia matters

POJK 10 clarifies the concept of Sharia-based lending for P2P operators. In summary, P2P operators could conduct their lending business based on Shariah principles. POJK 10 also allows a conventional P2P operator to convert to a Sharia-based P2P operator. Given the separation of conventional and sharia-based lending business activities, conventional P2P operators who do not convert cannot continue to conduct their sharia-based lending business activities (and vice versa).

7. Miscellaneous

POJK 10 also introduces new requirements for good corporate governance, including:

  • P2P operators must have good corporate governance guidelines.
  • P2P operators must have at least two administrators and a commissioner.

P2P operators must have an internal audit unit composed of at least one member with relevant expertise and/or experience.

As the pandemic proves that transformation is inevitable, POJK 10 will certainly accelerate and improve the trend to finance itself and the legal certainty of P2P operators. Hopefully, this could bring more consolation to the public in dealing with P2P operators. Again, Indonesia is making its credit industry more agile to respond to globalization.


With thanks to Jonathan Edward Tobing for his assistance in preparing this alert.

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