Since being regulated and supervised by the Financial Services Authority (Otoritas Jasa Keuangan/“OJK”), more precisely in 2016, the development of the information technology-based lending and borrowing service industry or commonly known as Fintech P2P Lending has recorded very significant growth.
Therefore, along with its very fast development, as well as accommodating the demands of the industry in the future, the Government through the OJK issued a new regulation, namely POJK Number 10 /POJK.05/2022 on Information Technology-Based Collective Financing Services (“POJK 10/2022”).
POJK 10/2022 is also an improvement of the POJK Number 77/POJK.01/2016 on Information Technology-Based Money Lending and Borrowing Services (“POJK 77/2016”) in order to provide optimal arrangements for consumer protection. POJK 10/2022 is effective since its promulgation on 4 July 2022 and at the same time revokes:
- All provisions originally set under POJK 77/2016, although any implementing provisions to said regulation will remain valid if they do not contradict any of the provisions set under POJK 10/2022; and
- Article 30, Part (a), Regulation of the OJK No. 4/POJK.05/2021 on the Application of Risk Management During the Use of Information Technology by Non-Bank Financial Services Institutions, which addressed the obligation of organizers of P2P lending services (“Organizer”) to only acquire, process, use, store, update and/or disclose consumer data in accordance with objectives that had been approved by the consumers in question.
Licensing
Based on the previous POJK 77/2016, parties who intend to register as an Organizer must apply for licensing to OJK through two stages consisting of registration and obtaining business licenses, whilst POJK 10/2022 only requires the obtaining of a business license according to Article 8 paragraph (1) and Article 9 paragraph (1).
However, Organizer who have obtained a business license from the OJK are required to apply for registration as an Electronic System operator to the authorized institution (Ministry of Communications and Information Technology) within 30 calendar days after OJK issues its business license.
Minimum Paid-up Capital and Minimum Equity Requirement
As regards minimum paid-up capital, POJK 10/2022 makes a distinction between existing Organizer (i.e., those registered and licensed under POJK 77/2016), and new Organizer to be licensed under POJK 10/2022.
POJK 10/2022 requires a minimum paid-up capital of IDR 25.000.000.000,00 (twenty-five billion rupiah) to Organizer at the time of establishment. This is a significant increase considering that the previous POJK 77/2016 only provided a minimum provision for paid-up capital of IDR 2.500.000.000,00 (two billion five hundred billion rupiah). Meanwhile, an existing Organizer that has obtained a business license or is in the process of obtaining a business license, is permitted to maintain its current paid-up capital.
Furthermore, POJK 10/2022 also regulates minimum equity of at least IDR 12.500.000.000,00 (twelve billion five hundred million rupiah). Where the equity is carried out in stages since the POJK 10/2022 has been in force (4 July 2022) with following conditions:
- IDR 2.500.000.000,00 (two billion five hundred million rupiah) valid for 1 (one) year;
- IDR 7.500.000.000,00 (seven billion five hundred million rupiah) valid for 2 (two) years; and
- IDR 12.500.000.000,00 (twelve billion five hundred million rupiah) valid for 3 (three) years.
Controlling Shareholders and Lock-Up Period
As is known in other financial industries, POJK 10/2022 also enforces the concept of Controlling Shareholders (Pemegang Saham Pengendali/“PSP”). As for the definition of PSP, it is a legal entity, individual person and/or business group that owns shares or capital: (i) of 25% (twenty-five percent) or more than the number of shares issued and has voting rights; or (ii) less than 25% (twenty-five percent) of the number of shares issued and having voting rights but the person concerned can be proven to have controlled the Organizer, either directly or indirectly.
Furthermore, POJK 10/2022 also requires Organizer to set at least 1 (one) PSP. In the event that shareholders who met the criteria are more than 1 (one) party, the Organizer must appoint them to be PSP.
On the other hand, POJK 10/2022 also stipulates a 3 (three) years lock-up period starting from the date the lender’s P2P business license is issued by the OJK, in which Organizer are prohibited from making any changes to its shareholding structure that would result in: (i) the addition of new shareholders; and/or (ii) changes in the PSP.
Fit and Proper Tests
In addition to identifying controlling shareholders, POJK 10/2022 also requires Organizer principals (pihak utama) in this matter consist of a PSP, directors and commissioners, or Sharia supervisory board members to pass a fit and proper test by OJK. This is a new requirement that was not imposed by POJK 77/2016. Such tests are to be conducted in accordance with the rules applicable to principals in other types of financial services provider.
Lending Restrictions
The maximum limit of receiving funds to each borrower remains fixed at IDR 2.000.000.000,00 (two billion rupiah). However, POJK 10/2022 imposes a maximum limit on funding by Organizer and their affiliates no more than 25% (twenty-five percent) of the total funding provided through a particular Organizer as per the end of each month. The maximum funding limit is carried out in stages since the POJK 10/2022 has been in force (4 July 2022) with the following conditions:
- 6 (six) months after any given month, the lending limit of 80% (eighty percent) of the total loan disbursed by a P2P lender and its affiliates by the end of the 6th month;
- 12 (twelve) months after any given month, the lending limit of 50% (fifty percent) of the total loan disbursed by a P2P lender and its affiliates by the end of the 12th month;
- 18 (eighteen) months after any given month, the lending limit of 25% of the total loan disbursed by a P2P lender and its affiliates by the end of the 18th month.
However, the new restriction does not apply to financial institutions that act as fund lenders, provided that they are duly licensed and supervised by the OJK.
Written by Marchel Tarsingot and Ivander Jonathan Angelo. Please click on the download button below to read this publication