Jakarta. Jakarta Police have carried out one of their biggest raids on illegal online lending operations this year, following President Joko “Jokowi” Widodo’s directives to curb predatory lending practices, which are undermining the industry. legitimate and growing fintech loans of $ 18.4 billion.
Comr. Hengki Haryadi, the police chief of Central Jakarta Metro, said Thursday that they raided an illegal online loan syndication office in Cengkareng, west Jakarta, the day before.
Police arrested up to 56 employees of the company’s payment and billing department for questioning. They also confiscated possible evidence, including 52 computers and 56 cell phones belonging to the employees.
âWe followed the report with our findings and thus found a credit bureau in Cengkareng, West Jakarta,â Hengki said. After confirming with the Financial Services Authority (OJK) that the loan company was illegal, police carried out the raid.
âWe obtained evidence and interviewed dozens of credit union office workers,â he continued.
The Jakarta Central Metro Police continue to investigate the case to find the owner of the illicit loan company and will reveal further details once the investigation is completed.
The illegal online lending transaction has grown exponentially over the past two years, thanks to the growing popularity of fintech applications during the pandemic. Illicit traders often promise the shame of borrowing easily from unsuspecting customers, who often lack financial literacy.
But, the loan often carries a high interest rate, which has trapped its clients in insurmountable debt. When customers cannot pay, illegal lenders often use violent and abusive tactics to demand payments.
The practice was severe enough to cause some of their clients to commit suicide. Earlier this week, a man in Bekasi, West Java, jumped from the roof of a shopping mall to his death after being unable to pay off debts for illegal online loans.
The problem was serious enough that President Jokowi felt compelled to act. He called on law enforcement to increase monitoring of illegal lending practices.
âI got information that many fraudulent and criminal acts have taken place. I have heard that disadvantaged people are being cheated, trapped in high interest rates by online loan companies and being pressured into various ways to repay their loans, âJokowi said in his speech at the OJK Virtual Innovation Day event on Monday.
Jokowi said the rapid development of digital finance must be sustained, supervised and well facilitated to achieve healthy growth for the popular economy.
According to the president, the development of financial technologies must also build a strong, sustainable and responsible digital financial ecosystem. It must also have risk mitigation considering possible issues (both legal and social) to avoid heavy losses and increase community protection.
“If we get it under control quickly and properly, Indonesia has great potential to become a digital giant after China and India, and can lead us to become the seventh economy in 2030,” he said. declared.
Undermining the fintech industry
Comr. Ahmad Ramadhan, head of the national police’s public information division, said his office is currently focused on eradicating illegal online lending practices.
As of October, the National Police Headquarters had handled 371 cases of illegal loan companies due to reports from the public and cyber police patrol. Of these, 91 cases have been taken to court, while the rest are under investigation.
âAlmost all of the victims of this illegal loan do not understand the practice of online loan fraud,â Ahmad said.
“Thus, prevention efforts are essential. Along with other stakeholders, the police continue to educate the public so that they do not fall victim to illegal loans,” Ahmad said on the program Zooming with Primus, broadcast. live on Beritasatu TV. Thursday.
Andi Taufan, public relations manager of the Indonesian FinTech Joint Financing Association (AFPI), said illegal online lending companies not only harmed victims but also damaged the FinTech industry. Their worrying practices could undermine public confidence in financial services, Andi said.
âWhat illegal lenders are doing is very disturbing and damaging to the fintech lending industry,â Andi said.
âAs a legal fintech industry, we have disbursed loans of 260 trillion rupees ($ 18.4 billion) to 66 million people. Indeed, there are bad debts of around 1.7%, but the benefits provided are much more important to encourage financial inclusion, help MSMEs and productive enterprises. companies, âhe said.
According to AFPI research, many people fall victim to illegal loans because they don’t know it is illegal. Then there is an urgent need amid the economic hardships caused by the pandemic.
âMany borrow without thinking about how to pay it. It is a challenge for all of us to educate the public to be more careful and vigilant when they receive illegal loan offers,â said Andi.