Indonesia’s online lending industry is undergoing a consolidation phase. Over the past year, several platforms backed by large corporate groups have exited the market or restructured their fintech lending businesses amid a sweeping regulatory overhaul and persisting challenges, including rising default rates, weaknesses in underwriting and borrower risk assessment, and intense competition.

Ringan, backed by China’s Ping An, exited the market in April 2025. Earlier this year, Maucash, linked to Astra Group and Hong Kong’s WeLab, ended its operations after returning its license to the Financial Services Authority (OJK), with Pinjam Modal, a digital lending unit under BFI Finance, following suit a few weeks later.

Other players are shifting ownership structures. According to DealStreetAsia, Danakini, previously owned by the Kawan Lama Group, is in the midst of transitioning ownership to Wetech Digital Technologies and Tekno Bagi Bangsa. OJK said the platform halted its online lending operations in October 2025 to facilitate this transition.

Nailul Huda, digital economy director at the Center of Economic of Law Studies (CELIOS), told the media outlet that several corporate-backed platforms have struggled to maintain momentum. This is particularly evident among those focusing on productive lending segments, which have faced significant turbulence over the past year.

These platforms typically finance micro and small businesses or supply chain activities. Though they are supporting real-sector growth, they also carry higher credit risks when economic conditions weaken orborrowers face liquidity challenges.

For Entjik S. Djafar, president director of DanaRupiah, a lending platform for consumer loans, these recent exits may also reflect shifting priorities. Some corporate parents may be stepping away from the sector because they also already operate financial products similar to online lending within their broader portfolios.

Regulatory crackdown

Regulators’ crackdown on non-compliant platforms is also accelerating consolidation across the sector. According to OJK, nine of the 95 licensed online lending platforms in Indonesia have yet to meet the minimum equity requirement of IDR 12.5 billion (US$734,000), which was due for December 2025.

This requirement is part of a new regulation on P2P lending platforms issued in 2024, which introduced adjustments and new provisions designed to strengthen oversight and impose stricter requirements, while also expanding permitted activities and offering greater flexibility to integrate conventional and sharia operations under one license.

Beyond capital requirements, industry players also face rising operational challenges. In November 2025, the industry’s aggregate credit risk level, measured by the ratio of 90 days past due (TWP90) to the total loans, stood at 4.33%, marking a significant increase from 2.52% a year earlier.

24 P2P lending operators had a TWP90 rate above the regulator’s “safe” threshold of 5% in November 2025, “dominated by the productive segment”, according to Agusman, OJK’s chief executive for supervision of financing institutions.

This sharp increase in overdue loans reveals deteriorating borrower repayment capacity, threatening the financial stability of these online lending platforms and investor returns.

At the same time, OJK continues to crack down on illegal platforms. Since 2017-2018, the regulator has shut down or blocked more than 12,800 entities, underscoring the proliferation of illicit lending activities. From January 01, 2026 to February 26, 2026 alone, the regulator identified and shut down 951 illegal online lending entities, reflecting the persistent threat.

In Indonesia, illegal lending platforms pose are problematic because they often rely on harassment, threats and public shaming to ensure repayment. Experts told Channel News Asia that these aggressive tactics allow them to remain profitable despite high default risks.

Indonesia’s online lending industry is also grappling with unfair competition practices. Just this month, the Indonesia Competition Commission (KPPU) ruled that 97 companies in the sector were involved in collusion to set lending interest rates significantly above market equilibrium levels, IDN Financial reports.

The authority imposed fines totaling IDR 755 billion (US$44.4 million), with AdaKami, AsetKu, and Kredit Pintar facing the largest penalties at IDR 102.3 billion (US$6 million), IDR 100.9 billion (US$5.9 million), and IDR 93.6 billion (US$5.5 million), respectively.

The financing gap

Despite ongoing challenges and market consolidation, Indonesia’s online lending sector remains on a growth trajectory. As of January 2026, total outstanding loans in the space were up 25.52% year-on-year to IDR 98.5 trillion (US$5.8 billion).

Online lending is expected to continue this growth, driven by strong demand for alternative credit from consumers and small businesses amid persistent credit gaps.

The International Labour Organization estimates that the amount of credit lent to private businesses and individuals in Indonesia stands at just 25% of GDP. By comparison, credit to the private sector in Malaysia, Thailand and China amounts to 108%, 84% and 114% of GDP, respectively.

This underscores low credit penetration by international standards, highlighting significant untapped market opportunities.

Featured image: Edited by Fintech News Indonesia, based on image by farisfitrianto and alidrian via Freepik