Author: Vania Aqilla Cahyaningrum with Adam Kausar
“The Financial Service Authority (OJK) issued POJK No.10/POJK.05/2022 to respond to the developing area of Peer Peer Lending business in Indonesia. The main aspects that have been changed are the capital requirement, controller shareholder, licensing procedure, and minimum equity.”
By 4 July 2022, the Financial Service Authority (“OJK”) issued OJK Regulation No. 10/POJK.05/2022 on Information Technology Based Collective Financing Services (“POJK 10/2022”). It revoked the previous regulation, namely OJK Regulation No. 77/POJK.01/2016 of 2016 on Information Technology-based Lending Services (“POJK 77/2016”), which was originally introduced to quickly respond to the then-growing Peer-to-Peer Lending (“P2P Lending”) industry. Furthermore, the government and parliament also regulate some point of the P2P Lending in Law Number 4 of 2023 on Development and Strengthening of the Financial Sector (“P2SK Law“).
1. Changes on Contents of POJK 77/2016 to POJK 10/2022
A. Eligible Party and Minimum Paid-Up Capital
In POJK 10/2022, OJK only allows limited liability companies (PT) as the sole organizing entity. The regulation also limits share ownership by foreign nationals (WNA) and/or foreign legal entities, which must be owned jointly with Indonesian citizens (WNI) and/or Indonesian legal entities. Foreigners may become independent shareowners only through transactions on the stock exchange. In terms of capital requirements, there is an increase in the organizer’s capital requirements from a minimum of IDR 1,000,000,000.00 (one billion rupiah) at the time of registration to a minimum of IDR 25,000,000,000.00 (twenty-five billion rupiah) at the time of establishment.
B. Controlling Shareholders
The regulation also regulates more details regarding Controlling Shareholders (PSP), which were not previously regulated by POJK 77/2016. POJK 10/2022 holds in detail controlling shareholders regarding their obligations, responsibilities, and appointment. Companies that have obtained a business license when POJK 10/2022 is promulgated are required to report the determination of the PSP and its changes. In addition, each party is prohibited from being a PSP for more than one conventional provider or one provider based on Sharia Principles. POJK 10/2022 also regulates the responsibility of the PSP in the event of losses by the company if they arise due to:
- PSP, whether directly or indirectly, in bad faith, takes advantage of the organizer for PSP’s interests;
- PSP is involved in unlawful acts committed by the organizer; or
- PSP either directly or indirectly unlawfully uses the organizer’s assets, resulting in the organizer’s assets being insufficient to fulfill financial obligations
C. Licensing and Registration Procedure
As a comparison, In POJK 77/2016, the flow of licensing and registration of P2P Lending is as follows:
- apply for registration to OJK;
- apply for a license as a P2P Lending Operator within a maximum period of 1 (one) year from the date of registration at OJK
However, the flow of licensing and registration of P2P Lending is stipulated differently at POJK 10/2022 as follows:
- obtain a business license from OJK;
- after obtaining a business license, P2P Lending Operator must apply for registration to the competent authority at the latest 30 (thirty) days from the date of issuance of a business license from OJK.
D. Equity of Organizer Funding
The provisions in POJK 10/2022 state that organizers must at all times have equity of at least IDR 12,500,000,000.00 (twelve billion five hundred million rupiah). Organizers are required to achieve equity of at least IDR 12,500,000,000 after going through several milestones, such as:
- The first Milestone, IDR 2,500,000,000.00 (two billion five hundred million rupiah) applies one year from 4 July 2022;
- Second Milestone, IDR 7,500,000,000.00 (seven billion five hundred million rupiah) valid for two years from 4 July 2022; And
- The Third Milestone, IDR 12,500,000,000.00 (twelve billion five hundred million rupiah) is valid for three years from 4 July 2022.
2. Provisions in P2SK Law
The rapid growth of P2P Lending is considered natural because it provides more accessible access to the public, especially MSMEs who have difficulty obtaining funding. While it is essential to facilitate access to funding, this must be accompanied by strong governance and risk management from a trustworthy Fintech P2P Lending company. This is becoming increasingly crucial considering the increase in illegal online loans that worry the public. The government also pays special attention to P2P Lending regulations through the P2SK Law. The following are the provisions in the P2SK Law regarding P2P Lending:
- Stipulates that information technology-based collective financing services are included in the Financing Services business;
- Apart from personal loans, all forms of business that carry out continuous lending and borrowing activities and are profit-oriented are financing business activities and need to apply for official permits;
- The government can become a shareholder in financing services businesses;
- It is possible to convert and form sharia business units;
- The association’s role is to assist OJK in supervisory and disciplinary roles for the benefit of the industry.
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