Modalku, an Indonesia-based peer-to-peer lending fintech startup, announced this week it is now fully registered with the Otoritas Jasa Keuangan (OJK). Founded in 2016, Modalku describes itself as an online marketplace for small businesses to acquire loans and for lenders to fund small business loans to earn returns. The company revealed:
“Our technology-based approach enables borrowers to receive loans for the first time or at lower than market rates, while lenders will earn returns well above that of bank deposits, traditional fixed income products, and life insurance investment-linked products. This marketplace lending model is proven in countries such as USA, UK, China & Singapore.”
Modalku also noted that SMEs are a key source of employment and economic growth in Indonesia, but seem to be structurally disabled by financial institutions to get the financing they need. According to Digital News Asia, Modalku has already disbursed loans totaling more than Rp175 billion (US$13.15 million) to 320 MSME loans. While discussing the OJK registration milestone, Modalku co-founder and CEO Reynold Wijaya revealed:
“The fact that OJK focused on P2P lending regulations in Indonesia shows that the government sees the enormous potential of fintech in supporting financial inclusion. MSMEs have always been the backbone of the Indonesian economy, contributing 60.3% of national GDP and 97% of national employment. With solid regulation, underbanked MSMEs will have better access to financing and find it easier to grow their businesses.”
OJK senior executive researcher Hendrikus Passagi added:
“OJK supports and will continue to encourage borrowing and lending activities via P2P lending fintechs as an alternative to national financing products that require no collateral. We view the digital financial ecosystem built by P2P lending fintech platforms as ideal partners to support financial inclusion in Indonesia. With official registration at OJK, Indonesian P2P lending platforms are expected to increase borrowing and lending activities at a much larger scale for local MSMEs while still putting customer protection and stability of the Indonesian financial system first.”
Modalku currently operates in Indonesia, Singapore, and Malaysia.