OJK Explains Factors Causing Bad Credit in the Swollen Fintech Lending Industry

JAKARTA, KOMPAS.com – The Financial Services Authority (OJK) explained, there are several factors that make peer to peer lending fintech companies overshadowed by high bad loans.

Ogi Prastomiyono, Chief Executive of the Supervision of Insurance, Guarantee Institutions and Pension Funds, said that the factor that caused fintech lending companies to be overshadowed by bad loans was influenced by the platform’s ability to facilitate the distribution of funds.

“So that it can affect the outstanding funding and the amount of funding that is included in the default period,” he said in an official statement, in a written statement, quoted on Tuesday (9/5/2023).

Also read: OJK Asks Fintech Lenders with High Bad Loans to Submit a Improvement Plan

He added, high bad loans were also influenced by the quality of credit scoring to prospective loan recipients.

On the other hand, the ongoing loan collection process is also an influencing factor.

Finally, Ogi said, the high level of bad credit on online loans was also influenced by the large number of collaborations with ecosystems, for example the provision of credit insurance facilities.

To be able to reduce the number of bad loans in fintech lending, OJK asks companies that have TWP90 above 5 percent to submit an action plan to improve bad funding.

Also read: Fintech Lending Overshadowed by Bad Credit, Communal Adopts Hyperlocal Strategy

Not only that, OJK will also closely monitor the implementation of the company’s action plan.

“If the condition is worse, the OJK will carry out further surveillance in accordance with the applicable regulations,” he added.

Based on OJK records, the number of fintech lenders with bad credit or TWP90 above 5 percent is 23 companies as of March 2023. This figure represents 22.55 percent of the total online loan providers.

For information, in February 2023 there were 19 companies that had TWP above 5 percent. This figure is down from the number at the beginning of 2023 of 25 entities.

On an industry-aggregate basis, the OJK reported that the total TWP90 until the end of March 2023 was 2.81 percent.

Also read: Want a mortgage? Also Pay Attention to Loan Bad Credit History

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