Financial Crime World

Fintech Lending Regulated in Indonesia: Key Takeaways

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The Indonesian Financial Services Authority (OJK) has released a draft regulation governing Fintech lending operators, outlining key requirements for licensing and operation.

Expertise Requirements

Fintech lending operators must have human resources with expertise in:

  • Information technology
  • Related security aspects

Additionally, directors and commissioners must have expertise in the financial services industry. It is unclear whether OJK will introduce tests to ensure these expertise requirements are met.

Risk Mitigation Measures

Operators are required to undertake risk mitigation measures by transferring credit risk through:

  • Credit insurance
  • Guarantees

Data Protection and Security

Fintech lending operators must ensure the secrecy, integrity, and availability of:

  • Personal data
  • Transaction data
  • Financial data

Acquisition and usage of this data must be based on consent from the data owner, unless otherwise determined by applicable laws.

Prohibitions

Operators are prohibited from:

  • Receiving funds from users
  • Collecting funds directly from the public
  • Providing guarantees
  • Undertaking transactions for personal profit
  • And more

Institutional Landscape

The OJK is likely to be the main regulator in this area, with:

  • Bank Indonesia (BI) regulating payment issues
  • The Ministry of Communication and Informatics (MOCIT) playing a regulatory role
  • The Indonesian Foreign Investment Coordinating Board (BKPM) regulating foreign investment

Preliminary Key Observations

The draft regulation requires:

  • A minimum capital requirement of IDR 2,000,000,000 at registration with OJK
  • A minimum capital requirement of IDR 5,000,000,000 for business license application
  • Foreign ownership limit set at 85%
  • Implementation policies will determine the optimal balance between promoting innovation and ensuring prudential corporate governance principles

Contact

For further information on this topic, please contact:

David Dawborn Partner at Herbert Smith Freehills david.dawborn@hbtlaw.com