Financial Services Authority Indonesia issues regulation for fintech firms

Indonesian Financial Services Authority (OJK) has issued a regulation on fintech companies, which run P2P lending businesses, Jakarta Post reported.

The regulation requires the fintech firm to have Rp 1 billion (US$74,239) capital during business registration with OJK and a rise to Rp 2.5 billion when it applies for a business license. The capitals are lower than what was stated in the draft regulation amounting to Rp 2 billion and Rp 5 billion respectively.

According to Muliaman D. Hadad, chair of OJK, that the regulation was still an initial step made by the authority to regulate and supervise the business. "What's important is they get onto our radar because we don't want to regulate the prudential aspects hastily. We want to provide [business] transparency guidelines first,” he stated in the OJK's annual press briefing recently, as reported by JakartaPost.

The regulation issued does not strictly regulate maximum interest rates on loans. It states that the fintech companies can advise its investors and customers of an interest rate by considering fairness and national economic development.

There is also a regulatory sandbox implemented by OJK in which, fintech companies will be able to test any service they want to offer to consumers under the supervision of the authority before it issues further regulations.

In September 2016, Bank of Indonesia announced to launch fintech office in the country, designed to facilitate fintech players to build networks, after OJK revealed plans to issue rules by the end of 2017 to regulate fintech players' activities.