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331,000 Gen Zs and millenials trapped in online debt

Jakarta Globe - December 6, 2023

Jakarta – A total of 331,000 millennials and Gen Zs in Indonesia find themselves trapped in non-performing online loans amounting to Rp 675.14 billion ($43.55 million).

According to data from the Financial Services Authority (OJK), as of September 2023, there are 19.52 million borrowers with outstanding loans reaching Rp 50.26 trillion. Among them, millennials and Gen Z aged 19-34 years comprise 11.45 million users, with outstanding loans amounting to Rp 27.56 trillion.

In terms of loan quality, a substantial segment of this borrower demographic maintains current loans (up to 30 days), amounting to Rp 24.62 trillion from 9.89 million users. However, 1.23 million millennials and Gen Z individuals have loans classified as non-performing for 30-90 days, with outstanding amounts totaling Rp 2.27 trillion.

As for non-performing loans exceeding 90 days (TWP 90), there are 331,000 users with outstanding loans amounting to Rp 675.14 billion as of September 2023. This figure reflects an increase from the previous month, August 2023, which recorded 259,000 users with outstanding loans of Rp 602.69 billion.

Despite the challenges, data also indicates a decrease in the number of users with TWP 90 loans in the age group under 19 years, while a significant decline occurred in the age groups of 35-54 years and over 54 years.

From the distribution of loan quality, peer-to-peer lending fintech platforms have a 90-day default rate of 2.82 percent as of September 2023. It increased to 2.89 percent in October 2023.

OJK continues to strive for financial literacy and inclusion across various segments of society. As part of these efforts, OJK organized the event "Financial Education in Commemoration of National Teacher's Day 2023" in Blora, Central Java, on Tuesday. The participants included female teachers, SME practitioners, and the general public.

Executive Head of Supervision of Financial Service Business Behavior, Education, and Consumer Protection at OJK, Friderica Widyasari Dewi, emphasized the importance of financial literacy, particularly for women who play a crucial role as family treasurers and the primary educators of children.

"Improving financial management knowledge becomes a crucial skill for women. Good financial literacy skills are necessary for making wiser and more careful decisions in managing family finances and businesses," said Friderica.

Empowering financial literacy is expected to create a financially savvy younger generation. With proficient financial literacy, women in SMEs will be able to manage their businesses effectively, contributing to overall economic growth.

Source: https://jakartaglobe.id/business/331000-gen-zs-and-millenials-trapped-in-online-deb