OJK Cracks Down on 'Tadpole' Scheme in P2P Lending

Regulatory Action to Protect Consumers

The Financial Services Authority (OJK) has taken decisive action to restrict the 'tadpole' or 'kecebong' payment scheme in the peer-to-peer (P2P) lending industry ¹

. This regulatory move aims to safeguard consumers from potentially predatory financing practices. The tadpole scheme, characterized by larger initial payments that gradually decrease, has been a subject of scrutiny in the fintech sector.

Conditions for Implementation

According to Agusman, Head of Executive Supervision of Financing Institutions at OJK, P2P lending platforms can only implement the tadpole scheme if they comply with specific requirements ¹

. These include adhering to the prevailing economic benefit limits. This regulatory clarification comes as the industry continues to evolve, with various payment schemes being offered to consumers.

Industry Perspective on Tadpole Scheme

The tadpole payment scheme has gained popularity, particularly among small and ultra-micro merchants who require short-term financing ²

. Entjik Djafar, Chairman of AFPI, notes that this scheme is beneficial as it allows borrowers to make larger initial payments, thereby reducing their future obligations. However, the OJK's new restrictions indicate a cautious approach to ensure that such schemes do not exploit consumers.

Implications for P2P Lending Platforms

P2P lending platforms are now required to ensure compliance with the OJK's new regulations. This involves revising their payment schemes to align with the regulatory requirements. The move is expected to enhance consumer protection and promote healthier financing practices within the industry.