OJK’s Updated P2P Lending Framework: What You Need to Know

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On 24 December 2024, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan - “OJK”) introduced OJK Regulation No. 40 of 2024 on Information Technology-Based Collective Funding Services (“OJK Reg 40/2024”). This regulation replaces the previous regulation, namely OJK Regulation No. 10/POJK.05/2022 which regulates the same matter (“OJK Reg 10/2022”) and updates requirements for Peer-to-Peer Lending Operators (“P2P Operators”).

Coming into effect on 27 December 2024, OJK Reg 40/2024 was introduced to address the rapid growth of digital lending and emphasizes key priorities such as financial inclusion and consumer protection.

Here is what you need to know about this regulation.

Funding Limits

Under the previous regulation, the maximum funding limit was capped at Rp2 billion. ^[1] However, OJK Reg 40/2024 introduces differentiated funding limits, setting a maximum consumption funding limit of Rp2 billion ^[2] and a maximum productive funding limit of Rp5 billion. ^[3] P2P Operators intending to provide productive funding between Rp2 billion and Rp5 billion must comply with additional requirements. Specifically, their non-performing loan ratio must not exceed 5% over the previous 6 months, and they must not be subject to any OJK sanctions, such as business restrictions or suspensions. ^[4] These updates aim to enhance oversight, promote responsible lending practices, and support financial inclusion.

Controlling Shareholders and Shareholding Limits

Controlling shareholders (Pemegang Saham Pengendali – “PSP”) of P2P Operators in the form of legal entities, are now required to have been operational for at least 2 years before acquiring shares. ^[5] Additionally their investment in a P2P Operator cannot exceed their total equity, ^[6] except for financial institutions under OJK supervision, which are exempt from this restriction, granting them greater flexibility in shareholding arrangements. ^[7]

Form of Legal Entity and Ownership Opportunities

OJK Reg 40/2024 allows P2P Operators to be established as cooperatives, ^[8] requiring at least 9 individuals under cooperative law. It also expands eligible owners to include the Indonesian state and regional governments, ^[9] replacing the previous restriction to limited liability companies.^[10]

Introduction of Sharia Business Unit

OJK Reg 40/2024 introduces the concept of a Sharia Business Unit for P2P Operators. Under the previous regulation, P2P Operators were limited to operating under either the conventional or sharia principle exclusively. ^[11] Now, conventional P2P Operators can establish a Sharia Business Unit ^[12], provided they meet specific criteria, such as obtaining prior approval from OJK ^[13], maintaining a minimum working capital of Rp10 billion ^[14], and fulfilling other regulatory requirements. This concept closely mirrors the Sharia Business Unit framework already implemented in the banking sector.

Employment Matters

Previously, P2P Operators intending to employ foreign workers were only required to notify OJK within 20 working days after the foreign worker was employed (in addition to the requirements for RPTKA and residence permits). ^[15] However, under this regulation, P2P Operators must now obtain prior approval from OJK by application submission using the form provided therein. ^[16] In addition, they must also outline their foreign workers utilization plans in their business plans. ^[17]

Moreover, the maximum employment period for foreign workers has been reduced from 3 years (non-extendable), ^[18] to 2 years with a one-time extension of up to 2 years. ^[19] This adjustment supports regular evaluation and renewal of foreign workers’ contracts, ensuring their roles remain essential and aligned with current needs. Additionally, it fosters the growth and engagement of local talent.

Outsourcing functions related to the assessment of funding feasibility and IT operations, including user access management and database management, is prohibited under this new regulation. ^[20]

Simplified OJK Approval Process for Shareholder Transitions

The new regulation introduces a new reporting obligation for ownership changes of P2P Operators involving non-PSP shareholders in non-public companies. ^[21] Ownership changes that result in an acquisition, including those affecting the PSP or other shareholders, still require OJK approval. ^[22] However, this marks a relaxation from OJK Reg 10/2022, which mandated OJK approval for all shareholding changes. ^[23]

Paid-Up Capital and Bonus Shares for Acquisitions

P2P Operators undergoing ownership changes through acquisition must ensure their paid-up capital meets the minimum requirement of Rp25 billion, if it has not already. ^[24] Additionally, it is also introducing a new method for increasing paid-up capital during ownership changes - through the issuance of bonus shares. ^[25] These bonus shares may include stock dividends derived from the capitalization of retained earnings, as well as non-stock dividends derived from the capitalization of share premiums and/or other equity components. ^[26]

Expansion of Business Activities

P2P Operators are now permitted to expand their business activities beyond their core operations by (i) acting as distribution partners for government securities to support government programs, (ii) collaborating on informational services, and/or (iii) engaging in other activities with OJK approval. ^[27] To pursue these expansion, P2P Operators must include the plan for these activities in their business plan, maintain a composite health rating of at least 2, have a minimum equity of Rp12.5 billion, and not be subject to administrative sanctions, such as restrictions or suspensions of business activities. ^[28]

Health Rating

OJK Reg 40/2024 now implements the concept of health rating for P2P Operators, as follows: ^[29]

Composite Rating	Description
Composite Rating 1	Reflects the condition of P2P Operators that are generally very healthy and highly capable of withstanding significant negative impacts from changes in business conditions and other external factors.
Composite Rating 2	Reflects the condition of P2P Operators that are generally healthy and capable of withstanding significant negative impacts from changes in business conditions and other external factors.
Composite Rating 3	Reflects the condition of P2P Operators that are generally moderately healthy and somewhat capable of withstanding significant negative impacts from changes in business conditions and other external factors.
Composite Rating 4	Reflects the condition of P2P Operators that are generally less healthy and less capable of withstanding significant negative impacts from changes in business conditions and other external factors.
Composite Rating 5	Reflects the condition of P2P Operators that are generally unhealthy and unable to withstand significant negative impacts from changes in business conditions and other external factors.

The above health rating will be determined based on the following factors: ^[30]

Capital	P2P Operators are required to maintain a minimum equity of Rp12.5 billion. [31] Existing P2P Operators must meet this requirement gradually according to the following deadlines: [32] A minimum of Rp7.5 billion of equity by 27 December 2024. A minimum of Rp12.5 billion of equity by 4 July 2025.
Funding	Funding quality is classified into five levels based on payment timelines (current, special attention, substandard, doubtful, and non-performing). [33] P2P Operators are required to maintain a non-performing funding ratio of less than 5%. [34]
Profitability	Profitability assessments focus on evaluating asset profitability and measuring operational efficiency levels. [35]
Liquidity	Liquidity assessments are based on the P2P Operator’s ability to fulfil short-term obligations, long term obligations, and maintain adequate cash flow. [36] P2P Operators are also required to maintain a minimum liquidity ratio of 120%, [37] calculated by comparing current assets to current liabilities. [38]
Management	Management quality is assessed based on several factors, including the P2P Operator’s general obligations in fulfilling commitments to OJK and other stakeholders, as well as the implementation of effective risk management practices. P2P Operators are also expected to adhere to principles of good corporate governance. [39]

Key points to note are: (i) P2P Operators must maintain a minimum composite health rating of 3; ^[40] (ii) If the health rating decreases to composite 4, intensive supervision will be implemented; ^[41] (iii) If no corrective measures are taken during the intensive supervision period, or if the health rating further declines to composite 5, special supervision will be imposed; ^[42] and (iv) If the issues are not resolved by the end of the special supervision period, the P2P business license may be revoked. ^[43]

Administrative Sanctions

Compared to the previous regulation, OJK Reg 40/2024 outlines a wider range of administrative sanctions that will be imposed for violations of certain provisions.

OJK Reg 10/2022	OJK Reg 40/2024
Written warning letter	Written warning letter
Fines/penalties	Fines/penalties
Restriction on business activities	Restriction on business activities
Revocation of license	Revocation of license
	Suspension of business activities (partially or entirely).
	Downgrade of risk assessment results;
	Cancellation of certain OJK approval
	Prohibition from serving as a controlling shareholder, and/or board of management member

Aside of the above administrative sanctions, OJK is also authorized to:

1. Downgrade the Health Rating of P2P Operators;
2. Reassess the Key Parties responsible for causing the P2P Operators to violate the provisions of OJK Reg 40/2024; and/or
3. Document the track record of parties responsible for the violations in OJK’s Electronic System.

OJK Reg 40/2024 revokes OJK Reg 10/2022 and other earlier regulations in the P2P lending sector. ^[44] However, existing implementing regulations (such as OJK Circular Letters) remain valid unless they conflict with the provisions of OJK Reg 40/2024. ^[45]

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1. Article 26 (3) of OJK Reg 10/2022. ↩︎

2. Article 137 (3) of OJK Reg 40/2024. ↩︎

3. Article 137 (4) of OJK Reg 40/2024. ↩︎

4. Ibid. ↩︎

5. Article 8 (2) of OJK Reg 40/2024. ↩︎

6. Article 8 (4) of OJK Reg 40/2024. The equity herein referred to the Indonesian accounting standard (PSAK), which consisted of issued capital; retained earnings; etc. ↩︎

7. Article 8 (5) of OJK Reg 40/2024. ↩︎

8. Article 2 of OJK Reg 40/2024. ↩︎

9. Article 3 (1) of OJK Reg 40/2024. ↩︎

10. Article 2 (2) of OJK Reg 10/2022. ↩︎

11. Article 24 of OJK Reg 10/2022. ↩︎

12. Article 20 (1) of OJK Reg 40/2024. ↩︎

13. Article 22 (1) of OJK Reg 40/2024. ↩︎

14. Article 21 (1) of OJK Reg 40/2024. ↩︎

15. Article 18 (3) of OJK Reg 10/2022. ↩︎

16. Article 53 (1) of OJK Reg 40/2024. ↩︎

17. Article 53 (2) of OJK Reg 40/2024. ↩︎

18. Article 18 (1) of OJK Reg 10/2022. ↩︎

19. Article 55 (1) of OJK Reg 40/2024. ↩︎

20. Article 56 of OJK Reg 40/2024. ↩︎

21. Article 58 (2) of OJK Reg 40/2024. ↩︎

22. Article 58 (1) of OJK Reg 40/2024. ↩︎

23. Article 68 of OJK Reg 10/2022. ↩︎

24. Article 58 (5) of OJK Reg 40/2024. ↩︎

25. Article 58 (4) of OJK Reg 40/2024. ↩︎

26. Elucidation of Article 58 (4) of OJK Reg 40/2024. ↩︎

27. Article 130 (2) of OJK Reg 40/2024. ↩︎

28. Article 131 (1) of OJK Reg 40/2024. ↩︎

29. Article 177 of OJK Reg 40/2024. ↩︎

30. Article 167 of OJK Reg 40/2024. ↩︎

31. Article 169 (1) of OJK Reg 40/2024. ↩︎

32. Article 169 (2) of OJK Reg 40/2024. ↩︎

33. Article 171 of OJK Reg 40/2024. ↩︎

34. Article 172 (2) of OJK Reg 40/2024. ↩︎

35. Article 173 of OJK Reg 40/2024. ↩︎

36. Article 174 (1) of OJK Reg 40/2024. ↩︎

37. Article 174 (2) of OJK Reg 40/2024. ↩︎

38. Article 174 (3) of OJK Reg 40/2024. ↩︎

39. Article 175 of OJK Reg 40/2024. ↩︎

40. Article 167 (1) of OJK Reg 40/2024. ↩︎

41. Article 207 of OJK Reg 40/2024. ↩︎

42. Article 209 of OJK Reg 40/2024. ↩︎

43. Article 212 (1) of OJK Reg 40/2024. ↩︎

44. Article 236 of OJK Reg 40/2024. ↩︎

45. Article 235 of OJK Reg 40/2024. ↩︎

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

Go to

1. Funding Limits
2. Controlling Shareholders and Shareholding Limits
3. Form of Legal Entity and Ownership Opportunities
4. Introduction of Sharia Business Unit
5. Employment Matters
6. Simplified OJK Approval Process for Shareholder Transitions
7. Paid-Up Capital and Bonus Shares for Acquisitions
8. Expansion of Business Activities
9. Health Rating
10. Administrative Sanctions

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