Indonesia's Fintech Lending Sector Faces Rising NPL Challenges

Sharp Increase in Non-Performing Loans

The fintech lending industry in Indonesia has experienced a significant deterioration in asset quality, with the aggregate non-performing loan (NPL) rate surging to 4.33% as of November 2025. This represents a substantial increase from 2.52% in November 2024 and 2.76% in October 2025, indicating a rapid escalation in credit risk. The TWP90 (Tingkat Wan Prestasi 90 hari), which measures loans overdue by 90 days or more, has reached levels that are concerning for industry stakeholders and regulators alike.

Factors Contributing to Rising NPLs

Industry experts, such as Nailul Huda, Director of the Digital Economy at the Center of Economic and Law Studies (Celios), point to several key factors driving this increase. Firstly, there was a significant surge in loan demand during September and October 2025 as consumers sought financing to meet their needs, subsequently leading to a higher potential for defaults. Secondly, the shift in consumer spending priorities in November 2025 meant that a larger proportion of income was allocated towards consumption rather than debt repayment, further exacerbating the NPL situation. Additionally, natural disasters that occurred in Indonesia during this period had a detrimental impact on borrowers' ability to service their loans, contributing to the rise in NPLs.

Industry and Regulatory Implications

The sharp increase in NPLs within the fintech lending sector has important implications for both industry players and regulators. For fintech companies, managing credit risk effectively will be crucial to maintaining financial stability and investor confidence. Regulators, such as the Financial Services Authority (OJK), may need to closely monitor the situation and potentially introduce further measures to mitigate systemic risks. The performance of specific industry players, such as PT Dana Syariah Indonesia (DSI), is also under scrutiny as their issues have contributed to the overall industry NPL rate.

Forward Outlook

The outlook for the fintech lending sector in Indonesia remains uncertain, with the NPL rate expected to remain under close scrutiny. Industry stakeholders will be watching for any additional regulatory measures and assessing their strategies for managing credit risk in a challenging economic environment. The ability of fintech lenders to adapt to these conditions while maintaining growth will be critical to the sector's overall performance in 2026 and beyond.