OJK's latest draft proposes detailed requirements for interest rate caps and collection compliance, enterprises need to improve data and risk control processes in advance.
1. Regulatory Background and Latest Developments
The Financial Services Authority of Indonesia (OJK) recently released the latest regulatory draft for the cash loan industry, aiming to strengthen consumer protection and standardize market order. The draft proposes stricter requirements for interest rate caps, collection behavior, data protection, and other aspects.
According to the draft content, OJK will further lower the annual interest rate cap for cash loan products and set strict limits on overdue interest and fees. At the same time, the draft also clarifies the red lines for collection behavior, prohibiting any form of harassing collection.
2. Interest Rate Cap Adjustment
The draft stipulates that the annual interest rate (including interest and all fees) for cash loan products shall not exceed 100%. This adjustment will have a significant impact on the industry, especially for platforms that rely on high interest rates for profits.
3. Collection Compliance Requirements
The draft makes detailed provisions for collection behavior, including:
- Prohibiting collection during non-working hours (9 PM to 7 AM)
- Prohibiting disclosure of borrower's debt information to third parties
- Prohibiting the use of threatening, insulting, or harassing language
- Prohibiting collection through social media platforms
4. Data and Risk Control Requirements
The draft requires cash loan platforms to improve data management and risk control processes, including:
- Establishing a sound borrower credit assessment system
- Ensuring data security and preventing data leakage
- Regularly submitting business reports to OJK
- Establishing a complaint handling mechanism and promptly responding to consumer complaints
5. Enterprise Response Suggestions
Facing the new regulatory requirements, cash loan enterprises should take the following measures:
Response Strategies
- 1. Adjust product structure: Optimize interest rate pricing and reduce comprehensive costs
- 2. Improve risk control system: Strengthen credit assessment and reduce bad debt rates
- 3. Standardize collection processes: Establish compliant collection mechanisms and train collection personnel
- 4. Strengthen data management: Improve data protection measures to ensure compliance
- 5. Closely monitor regulatory dynamics: Timely adjust business strategies to adapt to regulatory changes
6. Conclusion
OJK's latest regulatory draft marks the entry of Indonesia's cash loan industry into an era of stricter regulation. Enterprises need to actively adapt to the new regulatory environment, strengthen compliance management, and improve service quality to survive and develop in the fierce market competition.
For enterprises planning to enter the Indonesian market, it is recommended to understand local regulatory requirements in advance, make full preparations, and ensure compliant operation of business.