Indonesia Wants to Cap Fintech Loans to Prevent 'Loan Shark' Business Practices
Indonesia’s financial regulator is reportedly considering a cap on loans and interest rates offered by fintech companies in a bid to reduce the risk of defaults.
In a report from Reuters, over 300,000 people have borrowed from peer-to-peer (P2P) lending platforms, which has been welcomed by the country where tens of millions of people have little or no access to bank credit.
So much so, that according to the Financial Services Authority (OJK), figures from the start of January show that the total amount of loans given out reached $218 million, or three trillion rupiah. This is compared to the 247 billion rupiah that was recorded in December.
However, even though the financial regulator is in support of fintech companies offering people access to loans, which has seen bank lending fall below 10 percent, it isn’t happy with the interest rates involved.
Eko Ariantoro, the director of the financial inclusion development directorate at OJK, said:
We don’t want these developing fintechs to become loan shark-like businesses.
At present, there are 36 registered fintech companies operating in Indonesia; however, Ariantoro explained that an additional 42 are in the process of being approved. According to the director, the proposed maximum lending rate was still being discussed. New regulations for crowdfunding platforms are also expected to be issued this year. It’s hoped that this will protect customers’ asset funds.
We are trying to regulate the mechanism to acquire and collect fund. There should be a form of responsibility to the fund owner.
In October, Indonesia is playing host to the IMF-World Bank annual meeting, which will see Christine Lagarde, director of the International Monetary Fund (IMF) speaking at the international conference.
Yesterday, Lagarde said that the technology behind bitcoin could be harnessed to be used against cybercriminals to ‘fight fire with fire.’ The head of the IMF explained that while the anonymity of some cryptocurrencies was becoming attractive to criminals, that same technology could also be used against them.
In an IMF blog post, Lagarde explained that:
The same innovations that power crypto-assets can also help us regulate them. To put it another way, we can fight fire with fire. Regulatory technology and supervisory technology can help shut criminals out of the crypto world.
At the upcoming G20 summit meeting in Argentina in next week, crypto assets will be on the agenda for discussion.
Yesterday, it was reported that Japan is expected to urge its G20 counterparts to increase its efforts at preventing cryptocurrencies being used in money laundering. France and Germany are also expected to make a joint proposal that calls for bitcoin to be regulated.
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