Financial regulation
Regulatory our bodies
Which our bodies regulate the supply of fintech services?
Fintech services in Indonesia are primarily regulated by two authorities our bodies, Bank Indonesia (BI) and the Financial Services Authority (OJK).
Regulated actions
Which actions set off a licensing requirement in your jurisdiction?
Generally, all events that conduct enterprise actions in Indonesia are topic to licensing and registration necessities below the authority of the Ministry of Investment / Indonesian Investment Coordinating Board. For companies in the monetary sector, there are extra particular licensing necessities below the authority of BI or the OJK.
For enterprise actions that fall below the authority of BI, corresponding to fee techniques, whether or not the licensing requirement is triggered depends upon the scope of enterprise actions in which an organization engages. For instance, enterprise actors in the fee system sector engaged solely in the pre-transaction or post-transaction steps shall be deemed as supporting suppliers, which doesn’t set off any licensing requirement from BI. The similar applies to enterprise actions that fall below the authority of OJK and whether or not they are going to set off a licensing requirement.
For monetary providers regulated below OJK Regulation No. 13/POJK.02/2018 relating to Digital Financial Innovation in the Financial Services Sector, dated 16 August 2018, the next actions are topic to licensing necessities in Indonesia:
- transaction settlement: this focuses on, amongst different issues, funding settlement;
- capital elevating, corresponding to fairness crowdfunding, digital trade, good contracts and different due diligence;
- funding administration; for instance, superior algorithms, cloud computing, functionality sharing, open-source info expertise, automated recommendation and administration, social buying and selling and retail algorithmic buying and selling;
- fundraising and fund disbursement: this consists of actions corresponding to peer-to-peer lending, different adjudication and third-party software programming interface;
- provision of insurance coverage; for instance, sharing financial system, autonomous automobiles, digital distribution and securitisation and hedge funds;
- market assist; for instance, synthetic intelligence or machine studying, machine-readable information, huge information, social sentiment, market info platforms and automatic information assortment and evaluation;
- different digital finance supporting actions, corresponding to social and eco-crowdfunding, Islamic digital financing, e-waqf, e-zakat, robo-advisers and credit score scoring; and
- different monetary providers actions; for instance, bill buying and selling, vouchers and merchandise utilizing blockchain-based functions.
Foreign organisers of commerce by an digital techniques supplier (PPMSE), which is any enterprise practitioner that gives digital communication amenities used in commerce transactions and operates from outdoors Indonesia and fulfils sure standards, shall be required to nominate a consultant in Indonesia and consequently should have a international commerce firm consultant workplace in the nation. However, we observe that as of this writing, the related regulatory authority doesn’t but have in place the required licensing infrastructure for international PPMSE.
Consumer lending
Is shopper lending regulated in your jurisdiction?
Consumer lending is regulated in Indonesia, with a selected deal with info technology-based cash lending providers (peer-to-peer lending), as regulated below OJK Regulation No. 77/POJK.01/2016 relating to Information Technology-Based Money Lending Services, dated 29 December 2016, as amended by OJK Regulation No. 4/POJK.05/2021 of 2021 relating to Application of Risk Management During the Use of Information Technology by Non-Bank Financial Service Institutions, dated 17 March 2021. The OJK has the authority to control, register and problem licences, in addition to supervise the fintech shopper lending trade. Pursuant to this regulation, an organization participating in the supply of peer-to-peer lending actions can have a most international possession of 85 per cent, which suggests at the least 15 per cent of the possession should be in the palms of Indonesian events. An organization that needs to register with the OJK is required to have a minimal issued and paid-up capital of 1 billion Indonesian rupiahs (about US$70,000). However, the present minimal issued and paid-up capital for international funding corporations is at the least 10 billion Indonesian rupiahs (about US$700,000). If this minimal issued and paid-up threshold is just not met, there’s a threat that licensing functions won’t be accepted.
Once an applicant is registered, she or he may have one yr to use for a licence from the OJK. An organization participating in the supply of peer-to-peer lending is just not allowed to interact in some other enterprise actions. The regulation refers to info technology-based cash lending providers (peer-to-peer lending) as the supply of economic providers that permit the lender to fulfill the borrower in the framework of getting into right into a lending settlement in rupiah straight by an digital system through the use of the web. However, thus far, there’s a moratorium in impact on the issuance of latest peer-to-peer licences in Indonesia. While this moratorium is in impact, the OJK is specializing in expediting the licensing course of for present peer-to-peer gamers in Indonesia whereas enhancing the related peer-to-peer regulatory framework. At the top of January 2022, the OJK issued a press release that it will quickly problem a regulation in the non-bank monetary sector amending fintech peer-to-peer lending laws. The modification is alleged to incorporate provisions on possession of joint funding service platforms, shopper safety prohibitions, restrictions on controlling possession of fintech corporations, minimal paid-up capital, minimal fairness and most funding. We anticipate that by the point the anticipated peer-to-peer regulation is issued that the federal government will even finish the moratorium on the issuance of latest peer-to-peer licences.
Secondary market mortgage buying and selling
Are there restrictions on buying and selling loans in the secondary market in your jurisdiction?
Currently, the buying and selling of loans in the secondary market in Indonesia is just not particularly regulated and there’s no particular restriction on this exercise.
Collective funding schemes
Describe the regulatory regime for collective funding schemes and whether or not fintech corporations offering different finance services or products would fall inside its scope.
The prevailing laws don’t expressly categorise actions into collective funding schemes and there’s no particular regulation on collective funding schemes. Instead, the Indonesian authorities gives laws with respect to different finance merchandise corresponding to fairness crowdfunding platforms and peer-to-peer lending, each of that are below the authority and supervision of the OJK. Peer-to-peer lending is described as an info technology-based cash lending service, which is particularly regulated below a distinct regulation than fairness crowdfunding. Equity crowdfunding is regulated below the auspices of the OJK, by OJK Regulation No. 57/POJK.04/2020 relating to Securities Offerings Through Information Technology-Based Crowdfunding Services, dated 11 December 2020, as amended by OJK Regulation No. 16/POJK.04/2021, dated 26 August 2021. The OJK has the authority to control, register and problem licences, in addition to supervise fairness crowdfunding actions. For instance, for sure fairness crowdfunding enterprise actors, the OJK not solely requires a licence but additionally an extra certificates from Indonesia’s Ministry of Communication and Informatics evidencing ESP certification.
Alternative funding funds
Are managers of different funding funds regulated?
There isn’t any regulation that particularly regulates the managers of different funding funds. However, in basic, funding managers are regulated below the authority of the OJK, pursuant to OJK Regulation No. 24/POJK.04/2014 of 2014 relating to Implementation Guidelines for the Functions of Investment Managers, dated 19 November 2014.
Peer-to-peer and market lending
Describe any particular regulation of peer-to-peer or market lending in your jurisdiction.
While market lending is just not particularly regulated in Indonesia, peer-to-peer lending is. The exercise of peer-to-peer lending is particularly regulated below OJK Regulation No. 77/POJK.01/2016 relating to Information Technology-Based Money Lending Services, dated 29 December 2016, as amended by OJK Regulation No. 4/POJK.05/2021 of 2021 relating to Application of Risk Management During the Use of Information Technology by Non-Bank Financial Service Institutions, dated 17 March 2021. It gives the OJK with the precise to control and supervise peer-to-peer lending actions, together with dealing with the registration and licensing of peer-to-peer lending platform suppliers. Peer-to-peer lending in Indonesia is described as the supply of economic providers whereby the lender meets the borrower in the framework of getting into right into a lending settlement in rupiah straight by an digital system through the use of the web.
Crowdfunding
Describe any particular regulation of crowdfunding in your jurisdiction.
Equity crowdfunding covers the supply of share providing providers performed by issuers to promote shares on to buyers by an open digital system community. Equity crowdfunding is regulated below OJK Regulation No. 57/POJK.04/2020 relating to Securities Offerings Through Information Technology-Based Crowdfunding Services, dated 11 December 2020, as amended by OJK Regulation No. 16/POJK.04/2021, dated 26 August 2021. Under this regulation, a licensed fairness crowdfunding platform supplier or organiser is ready to present entry for issuers (Indonesian restricted legal responsibility corporations) to promote their shares to buyers which can be additionally utilizing the platform. An fairness crowdfunding platform firm is required to be an Indonesian restricted legal responsibility firm or an Indonesian cooperative and have registered with and acquired a licence from the OJK to offer, handle and function the fairness crowdfunding platform.
Invoice buying and selling
Describe any particular regulation of bill buying and selling in your jurisdiction.
The prevailing laws don’t particularly tackle bill buying and selling in Indonesia.
Payment providers
Are fee providers regulated in your jurisdiction?
Payment providers in Indonesia are regulated primarily by Indonesia’s central financial institution, Bank Indonesia (BI), which is in cost of regulating fee system actions in Indonesia. Following the issuance of BI Regulation No. 22/23/PBI/2020 relating to Payment Systems (PBI 22/23), dated 30 December 2020, BI issued a number of extra laws that comprise extra particular and sturdy provisions with respect to fee system suppliers (PSPs) and fee system infrastructure suppliers (PSIPs). These extra laws are BI Regulation No. 23/6/PBI/2021 relating to Payment System Providers, dated 1 July 2021, and BI Regulation No. 23/7/PBI/2021 relating to Payment System Infrastructure Providers, dated 1 July 2021. PSPs are open to 85 per cent international share possession (with a most of 49 per cent of shares with voting rights held by international shareholders), whereas PSIPs are open to twenty per cent international share possession (with a 20 per cent most of shares with voting rights held by international shareholders).
Open banking
Are there any legal guidelines or laws launched to advertise competitors that require monetary establishments to make buyer or product information out there to 3rd events?
To date, there is no such thing as a regulation or regulation that requires monetary establishments to make buyer or product information out there to 3rd events to advertise competitors, until to the related authorities company for supervision functions or for regulation enforcement functions.
Insurance merchandise
Do fintech corporations that promote or market insurance coverage merchandise in your jurisdiction must be regulated?
In precept, the promoting and advertising of insurance coverage merchandise in Indonesia is regulated and licensed by the OJK, though there appears to be no differentiation but between fintech corporations and firms that interact in the traditional promoting and advertising of insurance coverage merchandise. In apply, licensed insurance coverage corporations in Indonesia have been promoting their merchandise over the web, by their very own platforms or by cooperating with different events (eg, e-commerce platforms or e-money platforms) to help in facilitating the promoting and advertising of their insurance coverage merchandise.
Credit references
Are there any restrictions on offering credit score references or credit score info providers in your jurisdiction?
There are restrictions on offering credit score info providers. In Indonesia, credit score experiences can solely be issued by a credit score bureau licensed by the Financial Services Authority (OJK). A credit score report is outlined below OJK Regulation 5/POJK.03/2022 relating to Credit Information Management Agencies, dated 28 March 2022, and BI Circular Letter No. 15/49/DPKL relating to Credit Information Management Agencies, dated 5 December 2013 (collectively, the Credit Bureau Regulation), as a services or products generated by a credit score bureau in writing, verbally or by another technique, sourced from credit score information and different information owned by the credit score bureau. The credit score report generated by the credit score bureau, amongst different issues, incorporates info on:
- statistics for planning, enterprise improvement and figuring out insurance policies;
- info to measure the efficiency and supervise the chance profile of the debtor or buyer;
- the flexibility of the debtor or buyer to fulfil its fund provision obligations;
- the character of the debtor or buyer; and
- different info that could be utilised to evaluate the talents of the debtor or buyer.
Pursuant to the Credit Bureau Regulation, a credit score bureau engages in the enterprise actions of gathering credit score information and different information, and processing credit score information and different information to generate credit score info.
The Credit Bureau Regulation additionally particularly mentions {that a} credit score bureau should be in the type of an Indonesian restricted legal responsibility firm and is topic to relevant international shareholding restrictions. In addition, a credit score bureau should receive a enterprise licence from the OJK to conduct its enterprise actions. While the overall possession of a number of international events in a credit score bureau is restricted to twenty per cent if one international social gathering owns multiple credit score bureau that international social gathering’s whole possession in all of the credit score bureaus mixed is restricted to twenty per cent.
In gathering and processing credit score info, a licensed Indonesian credit score bureau obtains credit score information from the OJK. The credit score information from the OJK consists of knowledge submitted to it by monetary establishments. A licensed Indonesian credit score bureau might also cooperate with monetary establishments to acquire credit score information or monetary establishments and non-financial establishments for different information, or each. A credit score bureau should make an effort to make sure that the supply of the information informs the related debtor or buyer of how the credit score information and different information shall be utilised. Credit information is outlined as information relating to the situation of the funding facility of the debtor or the client.
Other information in relation to a credit score bureau is outlined as information aside from credit score information that can be utilized to explain the potential of a sure social gathering in fulfilling the social gathering’s monetary obligations together with the behavioural patterns of the debtor or buyer.