Regulatory AlertsFinancial Services Authority Regulation No. 40 of 2024 on Information Technology-Based Collective Financing Services
The Indonesian Financial Services Authority (OJK) issued Regulation No. 40 of 2024 to implement the legal framework for Information Technology-Based Collective Financing Services (LPBBTI) under the Financial Sector Development and Strengthening Law. The regulation mandates a minimum equity of IDR 12.5 billion, restricts funding recipients to those domiciled in Indonesia, and imposes strict risk mitigation and operational requirements on service providers. It establishes a maximum funding limit of IDR 2 billion per recipient, with a conditional increase to IDR 5 billion for providers meeting specific credit quality standards, while repealing the previous 2022 regulation.
Financial Services Authority Regulation No. 40 of 2024 concerning Information Technology-Based Collective Financing Services
Abstract:
With the enactment of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, a significant milestone has been reached in the history of Indonesia's financial sector, including for the Information Technology-Based Collective Financing Services (LPBBTI) industry. Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector provides the legal basis for LPBBTI activities, including the regulation of the scope of LPBBTI activities, legal entity forms, ownership, capital contribution sources, business licenses, and business organization. Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector also mandates that provisions in Article 106 paragraph (6), Article 111 paragraph (2), Article 112 paragraph (3), Article 113 paragraph (4), Article 114 paragraph (3), Article 115 paragraph (5), Article 116 paragraph (3), Article 121 paragraph (2), Article 122 paragraph (3), Article 123 paragraph (2), Article 124 paragraph (2), Article 125 paragraph (4), Article 128 paragraph (4), Article 252 paragraph (4), Article 269, Article 270 paragraph (3), and Article 282 paragraph (3) be further regulated in a Financial Services Authority Regulation governing LPBBTI. The LPBBTI business model, which differs from other financial service sectors, where the Organizer acts only as an intermediary and cannot act as a party collecting third-party funds or sharing in the risk of loans provided by Funders to Fund Recipients, carries relatively high risk. Furthermore, the LPBBTI business model's complex use of Information Technology also contributes to a relatively high risk exposure.
The legal basis for this Financial Services Authority Regulation (POJK) is: Law No. 21 of 2011 as amended by Law No. 4 of 2023; and Law No. 4 of 2023.
The Financial Services Authority Regulation concerning Information Technology-Based Collective Financing Services regulates the following matters: a. the legal entity form of the Organizer; b. the business activities of the Organizer; c. the maximum limit of Financing; d. the prohibition of conducting financing other than to Fund Recipients domiciled within the legal territory of the Unitary State of the Republic of Indonesia; e. risk mitigation; and f. minimum equity.
The legal entity forms of the Organizer consist of: a. a limited liability company; and b. a cooperative.
The business activities of the Organizer consist of: a. provision; b. management; and c. operation, of LPBBTI.
The maximum limit for consumptive and productive financing to each Fund Recipient is IDR 2,000,000,000.00 (two billion rupiah).
The Organizer may provide productive financing exceeding the maximum limit up to IDR 5,000,000,000.00 (five billion rupiah) provided that the following conditions are met: a. having a maximum non-performing Financing quality of 5% (five percent) over the last 6 (six) months; and b. not currently subject to sanctions restricting business activities or suspending business activities, in whole or in part, by the Financial Services Authority.
The Organizer is prohibited from conducting financing other than to Fund Recipients domiciled within the legal territory of the Unitary State of the Republic of Indonesia.
The Organizer is required to conduct risk mitigation at least consisting of: a. analysis of financing submitted by Fund Recipients; b. verification of user identity and document authenticity; and c. optimal collection of disbursed financing.
The Organizer is required to apply risk mitigation for the disbursement of Financing by considering: a. the minimum age limit for prospective Fund Recipients; and b. the minimum income limit for prospective Fund Recipients.
The Organizer is required to always maintain a minimum equity of at least IDR 12,500,000,000.00 (twelve billion five hundred million rupiah).
Note: This Financial Services Authority Regulation takes effect on the date of promulgation. This Financial Services Authority Regulation was promulgated on December 27, 2024, and established on December 24, 2024.
Upon the commencement of this Financial Services Authority Regulation, the implementation provisions of: a. Financial Services Authority Regulation Number 77/POJK.01/2016 of 2016 concerning Information Technology-Based Money Lending Services; and b. Financial Services Authority Regulation Number 10/POJK.05/2022 of 2022 concerning Information Technology-Based Collective Financing Services, are declared to remain in force insofar as they do not conflict with the provisions in this Financial Services Authority Regulation.
Upon the commencement of this Financial Services Authority Regulation, Financial Services Authority Regulation Number 10 of 2022 concerning Information Technology-Based Collective Financing Services is repealed and declared invalid.