JAKARTA - The Investment Alert Task Force has found 227 financial technology (fintech) peer to peer (P2P) lending companies unauthorised by the Financial Services Authority (OJK). Half of the companies are illegal fintech companies from China.
Head of the Investment Alert Task Force Tongam L. Tobing said the said fintech companies are found in violation of the OJK Regulation No. 77/POJK.01/2016 on the obligation of lending companies to be registered and permitted by the OJK.
“Some companies are not registered according to the existing regulation. To operate an online lending company in Indonesia a company must apply for a permit first,” said Mr Tobing on Friday (27/7).
Chinese companies find the Indonesian market highly attractive due to the potential of online lending business in Indonesia and China’s restriction of such operations in the country. The strict regulations prompt Chinese fintech companies to target the Indonesian market.
To operate here Chinese fintech companies obtain funding from Chinese investors. They operate in Indonesia with various business models that are difficult to identify.
Mr Tobing did not specify the amount of loans channeled by these illegal companies in Indonesia, due to incomplete information on the companies’ websites and applications.
“These fintech companies are illegal, so it’s hard to be sure of the amount of loans and customers. They also don’t have offices and staffs here; they operate virtually,” he explained.
The illegal Chinese fintech companies include Bantuan Pinjaman, Bee Cash, BusKas, Cinta Rupiah, Dana Saku, Dana Uang, Danaku, Dompet Pinjaman, Duit Instan, Dunia Pinjaman, Pinjaman Dana, Pinjaman Pintar, Pinjaman Sukses, and Rupiah Bijak.
Mr Tobing added that illegal fintech companies do harm to many parties, including customers, investors, company owners, and the state. The funds managed by these companies could be misused for money laundering and terrorism.
Customers’ data is also at risk of being misused for criminal activities. The state also does not receive any tax revenue from these illegal fintech companies. The online lending industry is also at risk of losing popularity due to the public distrust of the business.
The Investment Alert Task Force has cracked down the 227 fintech companies and asked that they stop their operations through websites, Google Play, and App Store. (AM/MS)