Draft Regulation on P2P Lending by OJK


The Financial Services Authority (Otoritas Jasa Keuangan “OJK”) is in the process to release a new Draft Regulation on Information Technology Based Joint Funding Services (“Draft Regulation”). It will repeal and replace the Regulation of the OJK No. 77/POJK.01/2016 on Technology-Based Fund-Lending Services (“Regulation 77/2016”) which is the current legal basis for P2P Lending. Besides, the Draft Regulation is not only to advance the access to alternative sources of funding but provide greater legal certainty and protection for parties involved in P2P lending as well.

Contains 118 articles, the Draft Regulation adjusts the revised provisions of Regulation 77/2016, and also a few additions related to various subjects, such as electronic systems, risk mitigation, partnerships, liquidation, and dissolution, among other areas addressed. However, this legal insights will only describe about the provisions on establishment and organization of the Company.

Establishment and Organization
On Regulation 77/2016, P2P lending organizers could be in the form of limited liability companies whether by Indonesian nationals or Indonesian nationals and foreign parties. Besides, the Draft Regulation proposes a new provision for the establishment of P2P organizers by Indonesian nationals and foreign parties, in detail the foreign parties (i) must be operating businesses within the financial services sectors and (ii) may only become owners through stock-exchange transactions.

Paid Up Capital Increased 
The Draft Regulation has introduced a provision of capital requirements. It said that P2P organizers must possess at least IDR 15 billion in paid-up capital during the licensing stage and this must be paid-up in cash with the full amount and which not be sought from any loans which take the form of futures deposits. As a comparison, under Regulation 77/2016 is only required paid-up capital of IDR 2.5 billion during the licensing process. This showed an extensive increase in capital requirements.

The Threshold
The maximum threshold for each borrower remains at IDR 2 billion under the Draft Regulation. But, it has suggested that the funding threshold from lenders, shareholders, and their affiliates is capped at 25% of the total annual outstanding funding at the time of funding.

BoD and BoC Requirements
Lastly, the organizational structures of P2P organizers have also made several changes. Under the Draft Regulation, the organizers required both boards of directors and commissioners to form at least three members, half of whom must have at least two years of experience in managerial positions. Sharia-based P2P organizers will also be required to have at least one member of their Sharia supervisory boards recommended by the National Sharia Board. Right now, P2P organizers are only required to have one director and one commissioner while sharia-based P2P organizers are not required to have a Sharia supervisory board.

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