In a financial landscape increasingly shaped by digital innovations, the disbursement of online loans, often referred to as “pinjol” in Indonesia, continues its remarkable ascent. What makes this trend even more intriguing is that the growth in online loan financing outpaces that of the traditional banking sector.
The Financial Services Authority (OJK) sheds light on this dynamic shift, revealing that outstanding online loan financing has sustained double-digit growth, reaching a noteworthy Rp59.38 trillion in November 2023.
Agusman, the Executive Head of the Supervisory Board overseeing various financial institutions at OJK, accentuates this trend. Drawing a comparison to October 2023, which witnessed a year-on-year increase of 17.66%, amounting to Rp58.05 trillion, the outstanding online loan financing escalates to new heights.
Agusman articulates, “The growth of outstanding financing [fintech P2P lending] in November 2023 continues to surge, marking an 18.06% year-on-year increase, whereas in October 2023, it demonstrated a growth of 17.06% year-on-year.” These insights were shared during the virtual Press Conference on the Assessment of the Financial Services Sector & OJK Policy Results from the December 2023 Monthly Financial System Stability meeting held on Tuesday, January 9, 2024.
On a different front, OJK meticulously tracks the aggregate level of non-performing loans or the 90-day delinquency rate (TWP 90), which stands robustly at 2.81% in November 2023, compared to 2.89% in October 2023.
Concurrently, the conventional banking sector shows a growth rate of 9.74% year-on-year during the same period, reflecting an improvement from the previous month’s 8.99% year-on-year growth.
Despite the relatively lower growth rate of bank credit compared to online loans, the sheer nominal value of loans disbursed by the banking sector is significantly larger, amounting to a staggering Rp6,965.90 trillion. The pinnacle of growth is observed in working capital loans, exhibiting a robust increase of 10.14% year-on-year.
Dian Ediana Rae, the Executive Head of Banking Supervision at OJK, underscores that the most substantial growth is witnessed in working capital loans, recording a commendable 10.14% increase. Furthermore, in terms of bank ownership, the most rapid expansion is observed within state-owned banks.
“State-owned banks are the driving force, witnessing a growth of 12.13% year-on-year and claiming a substantial 45.81% share of the total banking credit,” remarks Dian.
In tandem with the burgeoning popularity of online loans in Indonesia, a concerning trend emerges — the rise of illegal online lending platforms. OJK takes proactive measures to combat this issue, announcing the blocking of 6,680 illegal online loans (pinjol) from 2018 to December 2023.
OJK underscores its commitment to regulatory enforcement, collaborating with the members of the Illegal Financial Activities Eradication Task Force (Satgas Pasti).
Together, they intensify coordination efforts to address the challenges posed by illegal investments and curb the proliferation of illicit online lending activities. According to OJK’s meticulous records, a total of 2,248 illegal online loans have been halted or blocked from January 1, 2023, to December 31, 2023.
This surge in blocked illegal online loans during the specified period represents a significant escalation compared to previous years. OJK notes that in 2018, the blocking or cessation of illegal online loans amounted to 404 entities. The subsequent year witnessed a dramatic increase, with the number of blocked illegal online loans exceeding threefold compared to 2018, reaching a notable 1,493 entities.
