August 5, 2025 | 08:47 pm
TEMPO.CO, Jakarta - The Financial Services Authority (OJK) announced that outstanding financing distributed by the peer-to-peer (P2P) lending or online lending industry in June 2025 reached Rp83.5 trillion. This amount rose by approximately 25.06 percent year-on-year from Rp66.79 trillion.
What is fueling the rise of online lending?
Nailul Huda, Executive Director of the Center for Economic and Law Studies (Celios), explained that when people experience a decline or loss in income, they tend to seek financing options that match their needs.
“Their purchasing power decreases, but on the other hand, their needs still exist, and may even increase,” Nailul said in a statement to Tempo on Tuesday, August 5, 2025.
According to him, individuals who are unable to access conventional banking services due to limited financial history often turn to alternative financing options. One of the most accessible choices for them is online lending.
“For these people, meeting their needs becomes a priority, and one way to do that is by using online loans,” he added.
This condition, Nailul said, contributes to the continued rise in online loan distribution. He noted that online loans act as a financial cushion for those facing economic hardship.
“Mass layoffs are happening, and people’s purchasing power is declining. Online lending can be seen as a lifeline for those who truly need it,” he said.
He also pointed out that online lending is often preferred over bank loans due to its simpler procedures and fewer requirements. Many people, he said, are unfamiliar with the complex process involved in applying for a bank loan.
“The lengthy application process and the uncertainty of approval make people reluctant to borrow from banks. They also do not fully understand the procedures,” Nailul explained.
However, he warned that the rise in online lending distribution brings a higher risk of defaults. He emphasized that an increase in distributed loans is usually followed by a rise in the 90-day non-performing loan (NPL) rate within two to three months.
“That’s why I always stress the importance of maintaining prudent credit scoring,” he said.
OJK previously reported that online lending distribution in June 2025 stood at Rp83.5 trillion, up from Rp82.9 trillion in May 2025. For comparison, online lending distribution in June 2024 was recorded at Rp66.79 trillion.
Agusman, Executive Head of Supervision of Financing Institutions, Venture Capital Companies, Micro Financial Institutions, and Other Financial Services Institutions (PMVL) at OJK, stated that financing in the online lending sector grew by 25.06 percent year-on-year in June 2025.
He added that the 90-day NPL rate for June 2025 was 2.85 percent, a slight improvement from 3.19 percent in May 2024. The 90-day NPL refers to loans that remain unpaid 90 days past their due date.
OJK, according to Agusman, continues to supervise online lending platforms, especially those with NPL rates above 5 percent. This includes issuing guidance letters, requiring action plans to lower default rates, and monitoring the progress of those plans.
To improve the industry, OJK is also working to strengthen identity verification through Electronic Know Your Customer (E-KYC) measures and enhance credit scoring systems.
As of early August 2025, online borrower data has been integrated into the Financial Services Information System (SLIK), as part of broader efforts to improve transparency and accountability in the industry.
Ilona Estherina contributed to the writing of this article.
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