CLIENT NEWSFLASH

Regulatory Overhaul for P2P Lending Business Finally

Issued

The Financial Service Authority (“OJK”) recently issued OJK Regulation No. 10/POJK.05/2022 dated July 4,
2022 on Information Technology Based Collective Financing Services (“POJK 10/2022”). POJK 10/2022
revoked the previous regulation, namely OJK Regulation No. 77/POJK.01/2016 of 2016 dated December 29,
2016 on Information Technology-based Lending Services (“POJK 77/2016”), which was originally introduced
to quickly response to the then-growing Peer-to-Peer Lending (“P2P Lending”) industry. Now, due to
increasingly complex development of the P2P Lending industry, a highly comprehensive regulatory framework
is needed to safeguard the industry.

Since its inception, the P2P Lending industry in Indonesia saw remarkable growth, with factors such as digital
revolution, public interest in new financial technologies and a huge potential market, all contributing to the
industry’s upward momentum. However, the expedited growth of the P2P Lending industry also gave rise to its
fair shares of issues, such as poor industry practices (i.e., debt collection, data protection, exorbitant interest rates)
and more notably, a pervasive growth in illegal P2P Lending activities.

Over the years, the OJK has been committed to improving the P2P Lending ecosystem, closely monitoring its
players and cracking down on illegal P2P Lending companies. To this end, the OJK has even enacted a
moratorium on the issuance of new P2P Lending licenses, to ensure that a more mature legal framework is in
place before further growth of the industry.

POJK 10/2022 represents a culmination of the OJK’s efforts to improve the P2P Lending sector. Provisions under
this new regulation prove to be far more extensive compared to the previous regime, governing aspects of the
industry that POJK 77/2016 was previously silent on. Additionally, POJK 10/2022 also codifies some of the more
essential provisions and policies previously scattered under the OJK’s derivative regulations under one legal
product. All in all, the issuance of POJK 10/2022 imposes more stringent standards on the P2P Lending industry
as a whole. Although POJK 10/2022 provides a much-needed governance to the P2P Lending industry, the
comprehensive set of rules and requirements also invites more questions and issues in regard to the
implementation of the newly introduced provisions.

Please see below for an overview of POJK 10/2022.

 Revamping of the Licensing Regime

Under the previous regime of POJK 77/2016, the entry policy for P2P Lending business required a P2P Lending
Provider (“Provider”) candidate to register first before applying for a business license (at the latest, 1 year after
being registered).

Back in 2016, P2P lending was a completely new industry in Indonesia. Despite that, the business had already
attracted many players. POJK 77/2016 (along with its registration-licensing regime), to some extent, was
intended to provide an interim governance to nurture the development of the industry while at the same time
safeguarding its operation in Indonesia.

Now, similar to other more mature financial services, the new POJK 10/2022 revamped the industry’s entry
policy regime by enforcing a sole-licensing regime as a requirement to conduct its business in Indonesia.

Although the licensing process and requirements are quite similar with the licensing phase under POJK 77/2016,
POJK 10/2022 adds as follows:

i. an obligation for a Provider to immediately carry out Electronic System Operator (ESO) registration
within 30 (thirty) calendar days as of the issuance of business license by OJK;1

ii. submission of additional required documents, such as copies of tax return form of the last 2 (two) years
for individual shareholder candidates, business feasibility studies for the first 3 (three) years,
confirmation from relevant supervisory authority in the country of origin of the foreign shareholders.2

 Capitalization
Previously, POJK 77/2016 required a Provider to have a paid-up capital in the amount of at least
Rp2,500,000,000 (two billion five hundred million Rupiah) at the time of licensing. Under POJK 10/2022, the
amount is increased to at least Rp25,000,000,000 (twenty five billion Rupiah). POJK 10/2022 also requires the
capital to be paid-up in full, cash, and stored in a form of time deposit.3

Please note that this capitalization only applies for new Provider candidates, while existing licensed Providers,
Providers which are in the licensing phase, and Providers which have returned their registration certificates and
would like to resubmit its licensing application are exempted from this requirement. 4

 Minimum Equity
POJK 10/2022 introduces a minimum equity to the P2P Lending business whereby a Provider must at all times
have equity of at least Rp12,500,000,000 (twelve billion five hundred million Rupiah). The implementation of
this requirement is done through stages within 3 (three) years’ time, as follows:5

i. having at least Rp2,500,000,000 (two billion five hundred million Rupiah) within 1(one) year after the
issuance of POJK 10/2022;

1
Article 8(2) of POJK 10/2022
2
Article 9(1) of POJK 10/2022
3
Article 4(2) of POJK 10/2022
4
Article 113(1) of POJK 10/2022
5
Article 50(2) of POJK 10/2022
 ii. having at least Rp7,500,000,000 (seven billion five hundred million Rupiah) within 2 (two) years after
the issuance of POJK 10/2022; and

iii. having at least Rp12,500,000,000 (twelve billion five hundred million Rupiah) within 3 (three) years
after the issuance of POJK 10/2022.

 Controlling Shareholder and Single Presence Policy

The P2P Lending industry now acknowledges the concept of a ‘controlling shareholder’ (Pemegang Saham
Pengendali or “PSP”) which is defined as a legal entity, individual, or group company either: (i) owning at least 25%
(twenty five percent) voting shares in a Provider; or (ii) owning less than 25% (twenty five percent) voting shares
however can be proven to have any control, whether directly or indirectly, of the Provider.6

A Provider is required to state at least 1 (one) PSP, whereby OJK may also decide a Provider’s PSP at its discretion.
In the event that there are more than 1 (one) shareholders that fulfills the criteria as PSP, the Provider shall
determine all of such shareholders as PSPs of the Provider.7

Additionally, the regulation prohibits a party to be a PSP in more than 1 (one) conventional Provider or 1 (one)
sharia-based Provider,8 whereby a party that has already been a PSP in more than 1 (one) conventional Provider
and 1 (one) sharia-based Provider, is given 1 (one) year to adjust to the new provisions.9

A licensed Provider must also report its determined PSP and any changes thereof to OJK within 6 (six) months
since the enactment of the provisions.10 POJK 10/2022 further extends liability to the PSP of a Provider in certain
conditions, such as in the event of a Provider being at loss due to PSP’s involvement in any tort conducted by the
Provider.11

 Necessary OJK Approval on Corporate Actions

Previously, there was only 1 (one) general clause which stipulates the requirements of OJK approval for corporate
actions.12 Now, POJK 10/2022 expands on this by stipulating comprehensive provisions relating to corporate
matters requiring OJK’s approval, namely:

i. change of ownership;

ii. increase of paid-up capital;

iii. change of members of Board of Directors (“BOD”), Board of Commissioners (“BOC”), and Sharia
Supervisory Board (Dewan Pengawas Syariah or “DPS”); and

6
Article 1(29) of POJK 10/2022
7
Article 5(1) - (3) of POJK 10/2022
8
Article 6(1) of POJK 10/2022
9
Article 114(5) of POJK 10/2022
10
Article 5(4) of POJK 10/2022
11
Article 7(1) of POJK 10/2022
12
Article 12 of POJK 77/2016
 iv. merger and consolidation.13

Specifically, for point (i) above, POJK 10/2022 further elaborates on what constitutes a change of ownership of a
Provider, which consists of changes to the following:

i. Shareholders of a Provider that is not a public company (direct change of shareholders);

ii. Shareholders of the shareholders of a Provider that is not a public company (indirect change of
shareholders);

iii. PSP of a Provider that is a public company; and

iv. PSP of the shareholders of a Provider that is a public company.14

There are also additional requirements for a Provider after obtaining OJK approval on corporate matters, such as
convening a General Meeting of Shareholders no later than 60 (sixty) working days as of the date of the OJK
approval and submitting a report to OJK at the latest 10 (ten) business days as of the date of the GMS.15 Failure of
comply to such provisions will result in various sanctions, such as the void of the OJK approval, written warning,
limitation of business activities, and license revocation.16

 Lock-Up Period for Change of Ownership

POJK 10/2022 introduces a lock-up period whereby a Provider is prohibited from conducting any of the
abovementioned forms of change of ownership that results in any (i) new shareholder, and/or (ii) change of PSP,
within 3 (three) years since the date of the Provider’s business license from OJK.17

 Limitation on the Funding Amount by Each Lender

POJK 10/2022 enforces a new limitation on the maximum amount of lending that each lender (and its affiliates)
may provide, which is in the amount of 25% (twenty five percent) of the final lending position at the end of each
month.18 Notwithstanding the aforementioned, please note that such maximum amount may be conducted in
stages, as follows:

i. 80% (eighty percent) of the final lending position at the end of the month, at the latest 6 (six) months after
the enactment of POJK 10/2022;
ii. 50% (fifty percent) of the final lending position at the end of the month, at the latest 12 (twelve) months
after the enactment of POJK 10/2022; and

13
Articles 68 – 73 of POJK 10/2022
14
Article 68 (2) of POJK 10/2022
15
Articles 74(1) and 75(1) of POJK 10/2022
16
Articles 77(1) of POJK 10/2022
17
Article 68(3) of POJK 10/2022
18
Article 26(4) of POJK 10/2022. The elucidation of this Article provides an example that if at the end of the month, the total amount
of lending is Rp50 billion, then for the next month, each lender and its affiliates (non-financial institution) shall only be able to provide
lending in the amount of Rp12,5 billion (25% x Rp50 billion).
 iii. 25% (twenty five percent) of the final lending position at the end of the month, at the latest 18 (eighteen)
months after the enactment of POJK 10/2022.19
However, lenders in the financial services industry that is under OJK’s supervision may provide lending up to
75% (seventy five percent) of the final lending position at the end of each month.20

 Fit and Proper Test

POJK 10/2022 now expressly requires that (i) PSP, (ii) BOD members, (iii) BOC members, and (iv) DPS members
(for Sharia-based Providers) shall obtain approval from the OJK prior to their appointment through a fit and
proper test. The fit and proper test shall be conducted based on OJK Regulation No. 27/POJK.03/2016 of 2016 on
Fit and Proper Test for Main Parties of Financial Services Institutions.21

 Introduction on the Necessity of Business Plan

The new POJK 10/2022 emphasizes the necessity of the Provider’s business plan. Business actions that are
required to be included in the Business Plan under POJK 10/2022 are: (i) conversion plan into a sharia business
model; 22 (ii) entering into a cooperation; 23 (iii) opening/closing a branch office, 24 (iv) change of name and/or
electronic system, 25 (v) plan to change address, 26 (vi) plan to change business model, 27 (vii) plan to change
ownership,28 (viii) increase of paid-up capital,29 (ix) plan to change members of BOD, BOC, and/or DPS,30 and (x)
merger and consolidation plan.31

 Prohibitions for Provider

Other than the previously regulated prohibition under POJK 77/2016, POJK 10/2022 also introduces several new
prohibitions for the Provider, notably:

i. Prohibition to represent lenders to provide lending and/or provide an automatic lending feature;32
ii. Prohibition to give access to the members of BOD, BOC, DPS, and employees as well as their affiliates to
act as lenders;33

19
Article 26(5) of POJK 10/2022
20
Article 26(6) and (7) of POJK 10/2022
21
Article 21(1)-(4) of POJK 10/2022
22
Article 10(3) of POJK 10/2022
23
Article 38(2) of POJK 10/2022
24
Articles 60(4) and 61(2) of POJK 10/2022
25
Article 62(2) of POJK 10/2022
26
Article 63(2) of POJK 10/2022
27
Article 64(2) of POJK 10/2022
28
Article 68(4) of POJK 10/2022
29
Article 70(2) of POJK 10/2022
30
Article 71(2) of POJK 10/2022
31
Article 72(2) of POJK 10/2022
32
Article 111 c of POJK 10/2022. The elucidation of this Article defines automatic lending feature as lending conducted through a
scheme without the interaction or involvement of the lenders.
33
Article 111 d of POJK 10/2022
 iii. Prohibition to give access to the members of BOD, BOC, DPS, and shareholders as well as their affiliates
to act as borrowers;34
iv. Prohibition to have any loan (i.e., bank loan, shareholders’ loan, and loan from other sources);35 and
v. Prohibition to conduct any action which causes or enforces other financial services institutions under
the supervision of OJK to violate and/or circumvent the laws and regulations.36

 Other New Provisions Under POJK 10/2022

As a more comprehensive regulatory framework, POJK 10/2022 contains a myriad of new provisions, rules, and
requirements relating to the P2P Lending business in Indonesia, such as:

i. Corporate Governance. POJK 10/2022 now stipulates an extensive corporate governance

requirements for a Provider, such as: (i) requirement to prepare good corporate governance guidelines;
(ii) minimum numbers of BOD and BOC as well as DPS (iii) requirements for competence and
qualifications for BOD, BOC and DPS; and (iv) internal audit requirements.37 Providers are required to
comply with the requirements on the minimum numbers of BOD and BOC along with their competence
and qualification within 1 (one) year since the enactment of POJK 10/2022.38

ii. Relevant Requirements Relating to Human Resources. Under POJK 10/2022, a Provider must
fulfill several requirements with regard to human resources, among others:

 Requirement for all BOD, BOC, and officials 1 (one) level under the BOD to obtain work
competence certificate from an OJK registered certification institution in the fintech industry.39
Such certification must be obtained within 1 (one) year since the enactment of POJK 10/2022;40

 Requirement for a Provider to have special workforce to develop, change, and erase the
Provider’s electronic system;41

 Criteria for the utilization of foreign workers by a Provider;42 and

 Restriction on the types of business activities that a Provider may allocate parts of work, namely
related to funding assessment and/or information technology.43

iii. Business and Operational Activities. POJK 10/2022 sets out extensive rules and requirements

34
Article 111 e of POJK 10/2022
35
Article 111 h of POJK 10/2022 and its elucidation
36
Article 111 m of POJK 10/2022. The elucidation of this Article provides an example of action which is deemed as violating the
provision, such as in the event of a Provider entering into cooperation with rural banks without taking into account the rural banks’
operational area.
37
Articles 53 – 59 of POJK 10/2022
38
Article 114(2) of POJK 10/2022
39
Article 16(1) of POJK 10/2022
40
Article 114(2) of POJK 10/2022
41
Article 17(1) of POJK 10/2022
42
Article 18(1) of POJK 10/2022
43
Article 19(3) of POJK 10/2022
 concerning the business activities and operation of a Provider, among others:

 a Provider may only be in the form of a limited liability company;44

 POJK 10/2022 further sets out the types of business activities of a Provider, dividing them into
conventional and sharia models and acknowledging 2 (two) types of lending, namely productive
and multifunction (multiguna);45

 the use of the payment methods of escrow account, fund account, and virtual account or
payment gateway is similarly regulated under POJK 10/2022. However, POJK 10/2022
stipulates a specific maximum period for the fund placement in an escrow account, i.e., 2 (two)
working days for the lender and 1 (one) working day for the borrower.46

iv. Sharia-based P2P Lending. POJK 10/2022 recognizes the concept of Sharia-based P2P lending, which
in essence, P2P lending conducted based on provisions of Islamic law in accordance with fatwa and/or
statements of conformity with sharia from Dewan Syariah Nasional Majelis Ulama Indonesia.
Additionally, POJK 10/2022 also provides the possibility of conversion from conventional P2P lending
to sharia-based P2P lending. 47 As it is already possible to convert, POJK 10/2022 now expressly prohibits
conventional Provider to conduct sharia-based P2P Lending activities and must stop all marketing of
sharia-based P2P Lending products.48 Consequently, Providers conducting concurrent sharia-based and
conventional P2P Lending activities must settle any outstanding rights and obligations within 6 (six)
months since the enactment of POJK 10/2022.49

v. Funding Quality of Provider. POJK 10/2022 now introduces rates of funding quality of Providers
into current loans (lancar), loans with special attention (dalam perhatian khusus), non-current loans (kurang
lancar), doubtful loans (diragukan), and non-performing loans (macet).50 Further implementation of this
provision will be regulated by the OJK.

vi. Debt Collection. POJK 10/2022 stipulates a general guideline on debt collection in the event of a
defaulting borrower through the use of a warning letter to such borrower.51 POJK 10/2022 also stipulates
that Providers may enter into a cooperation with certain qualified third parties, such as those with
certifications, to conduct debt collection to its borrowers. Further implementation of this provision will
be regulated by the OJK.

vii. Reporting to OJK. Similar to the previous regime, a Provider is required to conduct regular (which
consists of monthly and annual reporting) and incidental reporting to OJK. However, Providers are now

44
Article 2(2) of POJK 10/2022
45
Article 24 of POJK 10/2022 and Article 25 of POJK 10/2022
46
Article 36(5) – (6) of POJK 10/2022
47
Article 1 point 4 and 10 of POJK 10/2022
48
Article 24 (3) of POJK 10/2022
49
Article 114 (1) of POJK 10/2022
50
Article 51(1) of POJK 10/2022
51
Articles 102 and 103 of POJK 10/2022
 required to submit an annual financial statement audited by public accountant. Other activities also
require a Provider to submit a report to OJK, for example: (i) branch opening;52 (ii) change of name and
Electronic System; 53 (iii) change of domicile; 54 and (iv) change of business model. 55 In addition, POJK
10/2022 now also provides a more extensive set of template forms for submission of reports and/or
approval applications to OJK in its Appendix.

viii. Cooperation with Government Agencies and Third Parties. POJK 10/2022 governs on the
cooperation between a Provider and third parties, either financial or non-financial institutions,
including in relation to the cooperation on data sharing.56 POJK 10/2022 also opens the possibility for
Providers to enter into a cooperation with government agencies to support government programs to
become a distribution partner for state securities (surat berharga).57 However, such cooperation can only
be for securities offering in the primary market.58

ix. Electronic System, Technical Requirements, and Personal Data Protection. There are several
key-items stipulated in POJK 10/2022 relating to the applicable requirements for the Electronic System
used by the Providers in performing its business activities, among others: (i) the obligation to own,
control, and operate the Electronic System; (ii) prohibition on the number of Electronic System owned
by a Provider; (iii) data submission obligation to fintech lending data center maintained by OJK through
system integration; (iv) the obligation to have Electronic System processing record; and (v) relevant
security requirements for the Electronic System.59 Personal data protection-wise, POJK 10/2022 adopts
a similar approach to the personal data protection provisions adopted in other financial services
regulations and still relies on a consent of data subject as the primary legal basis for personal data
processing activities.60

x. Further Provisions by OJK. Several matters under POJK 10/2022 will be regulated further by OJK,
namely on licensing procedure and mechanism; types of business activities, lender and borrower; risk
management; escrow account, virtual account, fund account, and other means of fund transfer;
cooperation; data and information processing; lending quality; reporting procedure and mechanism,
success rate of repayment (tingkat keberhasilan bayar/TKB), and debt collection.

POJK 10/2022 is in force as of the date of its enactment, July 4, 2022. The new regulation revokes POJK 77/2016
in its entirety and Article 30 letter a of OJK Regulation No. 4/POJK.05/2021 of 2021 dated March 17, 2021 on
Risk Management in for the Use of Information Technology by Non-bank Financial Institutions (“POJK

52
Article 60(3) of POJK 10/2022.
53
Article 62(3) of POJK 10/2022
54
Article 63(3) of POJK 10/2022
55
Article 64(3) of POJK 10/2022
56
Articles 38 and 40 of POJK 10/2022
57
Article 39(1) of POJK 10/2022
58
Article 39(2) of POJKJ 10/2022
59
Articles 42, 43, 45, and 46 of POJK 10/2022. Under Article 114(2) of POJK 10/2022, the requirement to own, control, and operate the
Electronic System must be fulfilled within 1 (one) year since the enactment of POJK 10/2022.
60
Articles 44 and 47 of POJK 10/2022
4/2021”). However, the provisions under the previous regime’s implementing regulations still apply so long as
they do not contradict to the new POJK 10/2022.

We note that while POJK 10/2022 provides a more extensive regulatory framework for the P2P lending business
industry, there are still some aspects that remain unregulated under the POJK 10/2022. In the near future, we
expect that OJK will issue more guidelines and legal products to supplement the effective implementation of
POJK 10/2022.

Please look forward to our next articles within the series, where we will provide more in-depth elaboration on the
notable changes under POJK 10/2022.

July 20, 2022

AKSET

Please contact Abadi Abi Tisnadisastra (atisnadisastra@aksetlaw.com), Alfa Dewi Setiawati

(asetiawati@aksetlaw.com), Noor Prayoga Mokoginta (nmokoginta@aksetlaw.com), Clara Anastasia So
(canastasia@aksetlaw.com), Caleb Nathanael Sitorus (csitorus@aksetlaw.com), M. Satria Kasmaliputra
(mkasmaliputra@aksetlaw.com), and Ammarsyarif G. Goenawan (agoenawan@aksetlaw.com) for further
information.

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