Online loans

OJK responds to MUI edict banning online lending containing riba

TEMPO.CO, Jakarta – Financial Services Authority (OJK) spokesperson Sekar Putih Djarot responded to the Indonesian Council of Ulemas (MUI) edict or fatwa which states that online or offline loans bear interest or are known as riba is haram or illegal under Islamic law. According to Sekar, the Indonesian financial system still adheres to a dual system, so it is still possible to set loans online or offline based on conventional law and Sharia law.

“We interpret it as a prohibited practice by illegal lenders,” Sekar said on Friday, November 12.

President Joko Widodo or Jokowi is concerned about illegal online lending and urges the OJK, ministries and police to eradicate them. Sekar pointed out that departments and agencies are working to tackle high-interest lending practices and law-breaking debt collectors.

According to her, the OJK and the police have been proactive in uncovering the root causes of the loan problem and in taking legal crackdowns. The OJK, she added, also held talks with the Indonesian Association of Fintech Lenders (AFPI), which agreed to urge lenders to cut the current interest rate on loans by 50%.

“OJK is now preparing to restructure the credit ecosystem, from [the elements of] capital, fit and proper, risk management and more, ”she said.

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