Prisma Ardianto, Jakarta – Indonesia's peer-to-peer lending industry is set to expand its loan disbursement by 70 percent to $16.6 billion this year, thanks to the high demand from the country's underbanked micro-, small- and medium enterprises, industry leaders said on Thursday.
"This year [we] project the loan disbursement to exceed Rp 250 trillion [$16.6 billion] from last year Rp 155 trillion," Kuseryansyah, the executive director of The Indonesian Joint Funding Fintech Association (AFPI), said during an event in Jakarta.
The association upgraded the 2022 projection from Rp 225 trillion after seeing the industry maintain its rapid growth this year.
Kuseryansyah said peer-to-peer lending expanded by 25 percent in 2020, despite the bank lending contracted that year. When bank loans grew by around 7 percent in 2021, fintech lending grew by 112 percent. He said this year, bank loans were projected to grow about 10 percent, and fintech lending can record more than 50 percent growth.
He attributed the growth to high demand from the micro-, small- and medium enterprises (MSME). According to World Bank, there was a huge financing gap in the Indonesian MSME sector. Conventional banks and financial institutions only provide Rp 1,000 trillion in financing for the industry, just 38 percent of its financing needs of Rp 2,600 trillion.
"There is a gap of Rp. 1,650 trillion. This is what causes this industry to thrive because the demand is high. Last year, we only met around Rp 155 trillion of the demand, or less than 10 percent of the gap," Kuseryansyah said.
Munawar Kasan, the deputy director of fintech regulation, research, and development at the Financial Services Authority (OJK), said the peer-to-peer lending industry's ability to attract ample customer funding also supported its growth in the past few years.
"There are 87.29 million user accounts [as of July 2022]. That means tens of millions of people transact or borrow money for business or consumptive activities. The industry continues to grow, and its users are increasing," Munawar said.
In June, OJK issued a new regulation for financial technology (fintech) companies to strengthen the nascent industry. The regulators now require existing fintech companies to increase their paid-up capital by up to RP 12.5 billion in the next three years. New companies must have a paid-up capital of no less than Rp 12 billion.
OJK also capped the interest charged by fintech and set boundaries in the agreement between the borrower, lender, and the fintech platform, including personal data protection and billing provisions.