Finance debt

Fintech association to create task force as bad debts skyrocket – business

Mardika Parama (The Jakarta Post)

Jakarta ●
Thu 1 October 2020

AFPI, P2P, bad loans, task force
To free

The Indonesian Association of Fintech Lenders (AFPI) has pledged to create a task force to help peer-to-peer (P2P) fintech companies stem the rise in bad debts caused by the COVID-19 crisis.

AFPI President Adrian Gunadi told reporters on Wednesday that the task force will help businesses improve the 90-day loan settlement rate (TKB90) and reduce the bad debt rate by improving their management of bad debts. risks.

“We will explore strategies to improve [loan] collection and collaborate with credit insurance [companies] and other supporting third parties, ”Adrian said at an online press conference.

According to AFPI data, Indonesian P2P fintech companies saw the proportion of bad loans rise to 7.99% in July, from 4.22% in March. The March figure was already a significant increase from 2.62% in March 2019, according to data from the Financial Services Authority (OJK).

AFPI attributed the rise in bad debts to the impact of COVID-19 on borrower income.

Read also: FinTech lenders struggle to get money back, bad debt rate hits 7.9%

In addition, Tris Yulianta, director of management, monitoring and licensing of OJK fintech, said the TKB90 rate of fintech lenders continued to weaken during the pandemic, showing increased risk of credit insolvency. .

According to OJK data, the TKB90 rate of 158 registered P2P fintech lending platforms was 92% in July, down from 93.8% in June and 94.9% in May.

“The TKB90 rate has been going down since April and currently stands at around 91%. Therefore, we all urge [P2P] platforms to improve their credit rating, risk management and “know your customer” [KYC] system, ”he said at the press conference.

Tris said the agency has posted notices and summoned fintech lending platforms with bad debt rates above 8%, demanding that companies create action plans to reduce bad debt.

“We discussed with companies how to reduce their bad debt ratio and asked them to improve their risk mitigation, while constantly monitoring their development. Al Hamdulillah [Thank God], some companies have shown results that exceed their action plans, ”he said.

He added that the OJK is focusing on issues related to the fintech lending industry, from the rapid growth of platforms to the quality of its loans and its contribution to the economy.

P2P lenders had disbursed 116.97 trillion rupees ($ 7.86 billion) in loans this year in July 2020, more than double the 4979 trillion rupees issued in the corresponding period last year. , according to data from the OJK.

As the industry continues to see increased loan disbursements, a recent survey shows lenders may be grappling with risky loans as they turned down more than half of borrowers’ loan restructuring requests.

According to AFPI data, only 34% of the 1.96 million restructuring requests received by 88 P2P lending platforms in May were granted by their lenders.

In May, borrowers requested restructuring for a total of Rs 1.080 billion in loans. Only Rs 236.9 billion of this figure has been approved by lenders.