Indonesian Association of Fintech Lenders Establishes Task Force to Help P2P Lenders Address Rising Bad Debt Numbers

the Indonesian Association of Fintech Lenders (AFPI) reportedly decided to create a special working group to help peer-to-peer (P2P) Financial technology companies with the significant increase in bad debts – which may have resulted from the socio-economic challenges created as a result of the coronavirus crisis.

AFPI president Adrian Gunadi told reporters on September 30 that the task force will help businesses improve the 90-day loan settlement rate (TKB90). The task force also plans to help reduce the bad debt rate by improving related risk management policies.

Gunadi noted that AFPI will explore different strategies to improve loan recovery processes. It will also work in cooperation with Indonesian credit insurance companies and various supporting third parties.

Like reported According to the Jakarta Post, Indonesian P2P fintech companies saw the number of bad debts jump to almost 8% in July 2020, which is well above 4.22% in March 2020, at the start of the pandemic (according to the latest AFPI data). The March figure was also a significant increase from the 2.62% reported in March of last year, the Financial Services Authority (OJK) confirmed.

AFPI says the significant increase in the number of bad debts is most likely due to the negative impact of COVID-19 on the income or income levels of borrowers.

Tris Yulianta, Director of Fintech Management, Monitoring and Licensing at OJK, revealed that Fintech lenders’ TKB90 rate has weakened during the COVID-19 pandemic, meaning there is a significantly increased risk bad credit loans"}” data-sheets-userformat=”{"2":513,"3":{"1":0},"12":0}”>bad credit loans insolvency.

The TKB90 rate of 158 registered or licensed Indonesian P2P Fintech loan service providers was 92% in July 2020, down slightly from 93.8% in June and around 95% in May 2020.

Yulianta recommended:

“The TKB90 rate has been going down since April and is currently around 91%. Therefore, we all urge [peer to peer] platforms to improve the quality of their credit rating, risk management and the “know your customer” system.

He added:

“We discussed with companies how to reduce their bad debt rate and asked them to improve their risk mitigation, while constantly monitoring their development… some companies have shown results that exceed their action plans. . “

Indonesian P2P lending platforms had issued 116.97 trillion rupees (approximately $ 7.86 billion) in loans (as of July 2020). This is more than double the amount of loans granted during the same period last year (January to July 2019).

Like reported At the beginning of September 2020, the Indonesian Association of Fintech Lenders had offered to help with the disbursement of funds allocated to the national economic recovery program linked to COVID-19.

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