The presence of illegal online loans (pinjol) continues to be a major concern for the fintech industry in Indonesia. As fintech peer-to-peer (P2P) lending platforms like Modalku strive to provide legitimate and regulated lending services, they face the challenge of illegal online loan providers that are unregulated and often exploit consumers.

Arthur Adisusanto, the Country Head of Modalku Indonesia, highlighted that illegal lending practices, which often include unreasonable interest rates, unethical debt collection, and misuse of personal data, are not only harmful to consumers but also pose a serious threat to the regulated fintech lending ecosystem. These practices create a negative experience for borrowers and erode trust in the sector.

"The main impact of illegal online loans is the decline in public trust in fintech lending, which eventually negatively affects licensed and regulated fintech services under the supervision of the Financial Services Authority (OJK)," Adisusanto said in an interview with Kontan on March 14, 2025.

In an effort to mitigate the effects of illegal online loans, Modalku has taken proactive measures to educate the public about the dangers of unlicensed lending platforms. Through various online channels, the platform aims to raise financial literacy and guide consumers in making informed financial decisions. Modalku emphasizes that people should opt for licensed fintech lending services to avoid the risks associated with illegal loans.

“We believe that by providing secure funding services, implementing strong risk management systems, and promoting continuous financial education, the public can more easily identify licensed fintech lending platforms,” Adisusanto explained.

Moreover, Modalku ensures that all funding processes adhere to prudent norms and strict risk management protocols. This commitment to ethical practices is designed to protect both borrowers and investors while ensuring the platform operates within legal boundaries.

As of now, Modalku has disbursed over IDR 69 trillion through more than 5.2 million transactions to support small and medium-sized enterprises (SMEs) across Indonesia, Singapore, Malaysia, Thailand, and Vietnam. The platform has maintained a low credit risk rate, with a total non-performing loan (NPL) rate of just 0.4% for all transactions.

In line with its ongoing efforts to combat illegal loans, the Financial Services Authority (OJK), together with the Financial Task Force for Illegal Financial Activities (Satgas PASTI), has shut down 587 illegal online loan entities as of February 27, 2025. Since 2017, OJK has successfully terminated 10,197 illegal lending platforms.

Despite these efforts, illegal online loans continue to be a growing concern in the fintech space. Industry players like Modalku are actively working to ensure that borrowers have access to legitimate, safe, and regulated lending options while contributing to the continued growth of the fintech sector in Southeast Asia.

PHOTO: MODALKU

This article was created with AI assistance.