Indonesia’s Financial Services Authority (OJK) has asked banks to temporarily stop lending through peer-to-peer (P2P) platforms if non-performing loans (NPLs) in those partnerships rise sharply.

As CNBC Indonesia reported, the pause is intended to give banks time to review the business model behind each arrangement.

Dian Ediana Rae, OJK’s Chief Executive of Banking Supervision, outlined the step among several instructions for banks.

Under these instructions, banks must evaluate all fintech partnerships and regularly assess each P2P partner’s performance and suitability.

Lenders must tighten oversight of credit disbursed through digital platforms.

In addition, they must ensure their risk appetite criteria and credit analysis of end borrowers follow prudential principles.

According to Dian, OJK continues to supervise and examine this area closely.

Banks are expected to strengthen risk management and governance whether they lend to P2P firms or channel credit through them.

The regulator will not hesitate to act against P2P lenders or banks that may fall short of prudential standards. It has had to take firm measures against both.

Recent cases, Dian said, should teach banks to lend and partner only after confirming that the credit is safe and reaches the right borrowers.

At the same time, OJK still encourages bank and fintech collaboration.

Dian described these partnerships as a strategic opportunity for banks to perform their intermediation role, especially for micro, small and medium enterprises (MSMEs).

He said OJK hopes this will widen access to financial services and deepen financial inclusion.

To guide this work, OJK has issued guidelines on bank and fintech cooperation.

These help banks apply measured professional judgement, keeping every partnership within strict risk management limits.

Featured image: Edited by Fintech News Indonesia, based on image by OJK via its website and DC Studio via Magnific.