Online Lending Boom: The Double-Edged Sword of 'Pinjol'

Online lending in Indonesia, known as 'pinjol,' has surged post-COVID-19, driven by financial pressure. While legal lenders comply with regulations, illegal ones exploit borrowers with high rates and data misuse. The unchecked growth of these platforms poses significant financial and privacy risks, particularly to Generation Z.

Jakarta, Nov 18 (360info) - The landscape of online lending, colloquially known as 'pinjol,' has seen a substantial rise in Indonesia since the onset of the COVID-19 pandemic. This surge links directly to heightened financial pressures that drive individuals toward such easily accessible financial solutions.

Data from Indonesia's Financial Services Authority (OJK) reveals that as of June 2024, there were 19.5 million active loan accounts, accounting for Rp.66.79 trillion (USD $4.1 billion) in loans. Legal lenders comply with stringent regulations, unlike illegal lenders who impose high-interest rates, excessive fees, and even resort to intimidation and harassment.

Illegal lending poses critical threats, not just financially but also in terms of privacy and cybersecurity. From January to July 2024, there were 9,596 complaints indicating rampant misuse and cybercrime, affecting many, particularly Generation Z, who are enticed by lifestyle choices supported by easy credit.

(With inputs from agencies.)