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Back to topIndonesia’s Financial Services Authority (OJK) has issued a new regulation on peer-to-peer (P2P) lending platforms.
The new regulation introduces important changes to the P2P lending industry, tightening governance in some areas while allowing more opportunities for collaboration and innovation. It broadens the types of legal entities that can operate P2P lending platforms, adjusts certain ownership and capital requirements, strengthens risk management, and opens up new opportunities for partnerships.
While some restrictions have been relaxed, OJK also sets clearer rules for lenders, borrowers, and platform operations. It has also issued a letter revising the maximum limits of daily economic benefit for both productive and consumptive loans.
LEGAL FRAMEWORK
OJK Regulation No. 40 of 2024 on Information Technology-based Joint Funding Services (Layanan Pendanaan Bersama Berbasis Teknologi Informasi) was officially issued on 24 December 2024 and came into effect three days later, on 27 December 2024 (POJK 40/2024). It replaces the previous regulation on this topic – OJK Regulation No. 10/POJK.05/2022 (POJK 10/2022).
POJK 40/2024 introduces significant updates, incorporating adjustments to concepts established under its predecessor, POJK 10/2022, while also introducing new provisions. Existing implementing regulations will remain in full effect unless they conflict with POJK 40/2024.
OJK has also introduced several changes to the P2P lending sector, including updates to the maximum daily economic benefit limit for funding, first introduced under OJK Circular Letter No. 19/SEOJK.05/2023 (OJK CL 19/2023) and now updated through OJK Letter S-21/D.06/2024 (the 2024 OJK Letter). The 2024 OJK Letter also introduces several new requirements of its own.
KEY CHANGES
The key updates are as follows.
1. Expansion of legal entities eligible to operate P2P lending platforms
POJK 40/2024 expands the types of legal entities permitted to operate P2P lending platforms. Under POJK 10/2022, only limited liability companies (Perseroan Terbatas or PT) were allowed to be licensed as operators of P2P lending platforms. The new regulation now includes cooperatives (koperasi) as eligible entities. This represents a shift from the previous framework and partial return to POJK 77/2016, which had also permitted cooperatives to operate P2P lending platforms.
2. Minimum capital, equity, liquidity, and non-performing loan requirements
Under POJK 40/2024, the minimum paid-up capital for P2P lending platforms at the time of establishment remains IDR 25 billion (US$1.6 million at current exchange rates), consistent with the requirements under POJK 10/2022. Existing P2P lending platforms intending to undergo change of ownership through an acquisition must comply with this minimum paid-up capital requirement.
POJK 40/2024 continues to prohibit capital participation in P2P lending platforms from being sourced from loans and linked to money laundering, terrorism financing, proliferation financing of weapons of mass destruction, or other financial crimes.
POJK 40/2024 also introduces equity maintenance requirements for P2P lending platforms. Platforms licensed before the issuance of the regulation must gradually meet these equity thresholds:
- maintain equity of at least IDR 7.5 billion (US$510,000) at the time the regulation came into effect (27 December 2024); and
- achieve equity of at least IDR 12.5 billion (US$850,000) by 4 July 2025, which is consistent with the deadline set under POJK 10/2022.
P2P lending platforms must also (a) ensure that their equity-to-paid-up capital ratio never falls below 50%, (b) maintain a liquidity ratio of at least 120% and (c) not have a ratio of non-performing loans above 5%. Existing P2P lending platforms have one year to comply with these requirements.
3. Ownership limits
POJK 40/2024 provides that detailed regulations will be issued in the future through a government regulation. In the meantime, POJK 40/2024 contains transitional requirements for foreign ownership until the government regulation is issued.
Under the transitional provisions, foreign ownership in a P2P lending platform (direct or indirect) is limited to no more than 85% of paid-up capital. However, P2P lending platforms licensed before the enactment of POJK 40/2024 and that already have foreign ownership in excess of 85% (direct or indirect) are exempt as long as their ownership structure is unchanged.
Another notable change in POJK 40/2024 is the removal of the foreign ownership cap exemption for public companies. Under POJK 10/2022, public companies trading on the stock exchange were explicitly exempt from the 85% foreign ownership restriction. However, POJK 40/2024 does not retain that exemption. This exemption may, however, be re-introduced in the forthcoming government regulation.
Capital participation by legal entity shareholders is capped at their equity value. However, this requirement does not apply to financial services institutions supervised by OJK, since they must comply with their own regulatory framework on capital participation.
4. Conditions for Controlling Shareholders (Pemegang Saham Pengendali or PSP) to invest in P2P lending platforms
POJK 40/2024 introduces stricter requirements for PSPs seeking to invest in P2P lending platforms. For example, in addition to meeting the source of funds requirements, there is now an express requirement for PSPs that are legal entities to have a proven operational history of at least two years before they are eligible to invest in a P2P lending platform. This requirement does not apply to newly formed PSPs resulting from mergers, consolidations or spin-offs.
5. Changes to lock-up period requirement
Under POJK 10/2022, P2P lending platforms were strictly prohibited from making ownership changes within three years after obtaining their business licence if those changes resulted in (a) the introduction of a new shareholder; and/or (b) a change in the PSP. No exceptions were permitted.
Under POJK 40/2024, the three-year restriction remains, but with a significant exception. Ownership changes that result in a new PSP are still prohibited during this lock-up period unless they are part of restructuring directed by OJK to improve the financial soundness of the P2P lending platform – acknowledging the latest developments in the sector. As the restriction no longer explicitly applies to the introduction of new shareholders, this gives greater flexibility than was available previously.
6. Types of funding and funding limits
Similar to the position taken under POJK 10/2022, POJK 40/2024 prohibits a P2P lending platform from acting as lender or borrower on its own platform.
POJK 40/2024 continues to recognise two types of funding: (a) productive funding and (b) consumptive funding. Similar to the previous regime, factoring remains generally prohibited, unless the following conditions are both met: (i) the factoring is secured by guarantees from the seller of the receivables; and (ii) the factoring constitutes productive funding.
Funding by a single lender and its affiliates is capped at 25% of the platform’s outstanding funding at the end of the month, except for OJK-supervised financial institutions, such as Indonesian banks, which are allowed to provide up to 75% of the outstanding funding.
The new regulation maintains a maximum loan cap of IDR 2 billion per borrower for both consumptive and productive funding, consistent with POJK 10/2022. However, POJK 40/2024 introduces greater flexibility by allowing productive funding to exceed this limit, up to IDR 5 billion, provided certain conditions are met.
OJK retains the authority to adjust these funding limits in response to industry developments, so ensuring that it remains adaptable.
7. Adjustments to maximum daily economic benefit limits
POJK 40/2024 mandates P2P lending platforms to comply with maximum economic benefit limits when facilitating funding. These limits were first introduced by OJK CL 19/2023, and were updated by the 2024 OJK Letter, reflecting OJK’s commitment to supporting continued growth in financing and ensuring strong funding support from lenders.
Effective 1 January 2025, the maximum daily economic benefit limits for P2P lending platforms are categorised based on loan tenor while maintaining the differentiation between consumptive and productive funding.
For consumptive funding, the limits are:
- 0.3% per day for loans with tenors of six months or less; and
- 0.2% per day for loans with tenors exceeding six months.
For productive funding, the limits vary based on the loan size:
- for micro and ultra micro businesses, the limit is 0.275% per day for tenors of six months or less, and 0.1% per day for tenors exceeding six months; and
- for small and medium businesses, the limit is 0.1% per day, whatever the tenor is.
8. More risk mitigation measures, including minimum eligibility requirements for lenders and borrowers
POJK 40/2024 requires P2P lending platforms to implement various risk mitigation measures by considering the minimum age and minimum income of prospective borrowers, carrying out credit scoring in channelling funding, and using escrow account mechanism, among other things. Some of the risk mitigation requirements come into effect after a six-month transition period.
The 2024 OJK Letter also introduces minimum eligibility requirements for both lenders and borrowers. For example, borrowers must have a monthly income of at least IDR 3 million. These requirements will apply to both the acquisition of new lenders and borrowers and the renewal or extension of existing agreements, with a compliance deadline set at 1 January 2027.
9. New lenders categories and funding cap
Through the 2024 OJK Letter, OJK has introduced new criteria for lenders in the P2P lending sector, dividing them into two categories: (a) professional lenders; and (b) non-professional lenders. By 1 January 2028, P2P lending platforms must ensure that the outstanding funding from non-professional lenders is not more than 20% of the aggregate outstanding funding.
10. Ownership changes
The new framework under POJK 40/2024 introduces a new, less strict approach to regulating ownership changes in P2P lending platforms than was the case under POJK 10/2022.
Under POJK 10/2022, all shareholding changes required prior approval from OJK. In contrast, POJK 40/2024 only retains the requirement for OJK approval for changes resulting in:
- a new PSP; or
- a change in the controlling shareholder of the PSP.
Meanwhile, changes in shareholding that do not affect the PSP or its controlling shareholder now only need to be reported to OJK.
11. Conventional and sharia activities in P2P lending platforms
POJK 40/2024 introduces a significant change by allowing P2P lending platforms to operate both conventional and sharia activities within the same entity, which was prohibited under POJK 10/2022. Under the new framework, P2P lending platforms can establish a Sharia Unit (Unit Usaha Syariah or UUS) alongside their conventional operations.
The establishment of a UUS requires prior approval from OJK. The application for approval must include the documentation set out in the regulation as well as a concurrent fit-and-proper test application for the prospective Sharia Supervisory Board (DPS) members. The UUS must maintain separate financial records from its “parent” P2P lending platform.
Conventional P2P lending platforms planning to establish a Sharia Unit must state their intention to carry out sharia-based activities in their articles of association.
POJK 40/2024 also provides some scenarios where a sharia spin-off may occur, including voluntary spin-off, mandatory spin-off, and an OJK-directed spin-off.
12. Direct investment restrictions
POJK 40/2024 introduces restrictions on direct investments by P2P lending platforms – something that was not previously regulated.
Under POJK 40/2024, P2P lending platforms may only make direct investments in (i) companies operating in the financial services sector in Indonesia and/or (ii) companies related to the P2P lending activities.
The regulation also imposes strict limits on these investments:
- total direct investments by a P2P lending platform cannot exceed 20% of its total equity; and
- direct investments in entities within the same group are capped at 10% of the P2P lending platform’s total equity.
These restrictions must be adhered to when making the investment. However, an exemption applies for investments in sharia companies established by a spin-off of the same P2P lending platform.
P2P lending platforms obtaining their business licences before the enactment of POJK 40/2024 are given one year to comply with these direct investment requirements (ie they have until 27 December 2025).
13. Expansion of permissible activities
POJK 40/2024 broadens the scope of permissible activities for P2P lending platforms.
Under POJK 10/2022, P2P lending platforms were limited to three core activities: funding (pendanaan), management (pengelolaan), and operation (pengoperasian) of information technology-based joint funding services (LPBBTI).
POJK 40/2024, however, allows P2P lending platforms to engage in additional activities, including acting as a distribution partner for government securities to support government programs, collaborating on informational services, and conducting other activities subject to prior approval from OJK.
Nevertheless, P2P lending platforms seeking to diversify their operations must meet conditions imposed by OJK, namely: (i) the intention to engage in additional activities must be clearly outlined in the P2P lending platform’s official business plan, (ii) must maintain a minimum equity of IDR 12.5 billion to qualify for engaging in these expanded activities, (iii) must achieve a minimum soundness level of Composite 2, and (iv) must not be under any administrative sanctions, such as restrictions on business activities or partial/total suspension of business operations.
14. Human resources and outsourcing
Each P2P lending platform is required to have at least two directors and one commissioner. The number of commissioners cannot exceed the number of directors. All directors and commissioners must pass OJK’s fit-and-proper test. POJK 40/2024 sets out requirements for minimum levels of experience and competence as well as restrictions on double hatting.
If the P2P lending platform has at least 25% foreign ownership (direct or indirect), then up to half of its board of directors and board of commissioners, respectively, may be foreigners, provided that all of the directors and at least half of the commissioners are domiciled in Indonesia. Additionally, at least half of the board of commissioners must have a minimum of two years of managerial experience at financial services institutions.
POJK 40/2024 introduces stricter requirements for employing foreign workers. Prior OJK approval is required before applying for a work permit to the Ministry of Labour, whereas the previous regime only required reporting to OJK. Additionally, the initial term of employment has been reduced from three years to two, but now with a possible two-year extension.
As for outsourcing, POJK 40/2024 permits P2P lending platforms to outsource certain tasks under outsourcing agreements, including outsourcing the development of information technology (IT), subject to fulfilling certain requirements. However, certain functions must not be outsourced, including, for example, the assessment of funding eligibility and the operational management of IT.
Outsourcing is also limited to third parties meeting specific qualifications. In addition, the P2P lending platforms remain fully accountable for any outsourced activities.
15. Cooperation
P2P lending platforms may cooperate with both financial institutions (eg insurance companies) and non-financial institutions (eg data centre providers), provided this activity satisfies certain criteria, such as inclusion in the business plan. If the cooperation (i) relates to the provision of information, (ii) facilitates risk mitigation, and/or (iii) pertains to outsourcing, then a report must be submitted to OJK within five business days from the date of the cooperation agreement.
P2P lending platforms may also cooperate in the exchange of data to improve the quality of their P2P lending services. Potential counterparties may include credit bureaus, alternative credit scoring providers and e-commerce operators.
CONCLUSION
POJK 40/2024 and the 2024 OJK Letter are key milestones in the ongoing development of Indonesia's regulatory framework for P2P lending platforms. The regulations introduce significant changes by expanding the permitted activities, imposing stricter requirements for shareholders, and offering the flexibility to integrate conventional and sharia operations under one roof. This shift reflects OJK’s desire to strengthen oversight while encouraging innovation in the P2P lending sector.
Stakeholders should closely monitor developments related to POJK 40/2024 and the 2024 OJK Letter, as well as any supplementary guidance from OJK or other relevant authorities and associations, to ensure continuing compliance with OJK regulations.
