Indonesia Grapples with Rising Online Loan Defaults – June 29, 2025
Jakarta – A growing online movement encouraging loan defaults (“Galbay“) is raising concerns across Indonesia, impacting the peer-to-peer (P2P) lending sector. Groups are forming on social media where borrowers openly advocate for failing to meet their credit obligations,with some individuals defaulting on loans from multiple platforms.Key Statistics:
Total Loan Debt: Rp 80.94 trillion (approximately $5.1 billion USD) as of April 2025, a 29.01% year-over-year increase.
Galbay Concentration: The majority of defaulted loans originate from Java Island, totaling Rp 56.3 trillion with a 3.08% default rate. Loans outside Java amount to rp 23.66 trillion with a 2.03% default rate.
Bad Credit Risk (TWP90): The risk of bad credit for P2P lending companies has risen to 2.93% in April 2025.
Industry Response & Regulatory Measures:
The Indonesian Financial Services Authority (OJK) is taking steps to mitigate the risks associated with Galbay.According to the chairperson of the Funding Association (AFPI), Entjik S Djafar, loan companies will actively pursue debt collection. He emphasized that loans are not “free” and must be repaid, stating, “OJK has also conducted education and literacy to the public that the loan must be paid again.”
Future OJK regulations will include:
Financing Limits: Restrictions on loan company financing facilities.
Feasibility Assessments: Thorough evaluations of borrower financial capacity.
Borrower Restrictions: Prohibiting loan companies from providing financing to customers who already have loans from more than three companies (in line with SEOJK Number 19/SEOJK.06/2023).
The OJK is also urging the public to use online lending facilities responsibly and avoid deliberate defaults.
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