Asia Lending Trending

India and Indonesia to See Regulatory Crackdown on Digital Lenders

Authorities in Asia are beginning to clamp down on digital lenders and personal loan providers in the region to attempt to reign in the fast-growing sector.

Officials are looking particularly into India and Indonesia, due to their “credit-hungry” large economies. These easy access loan providers have boomed in these regions as large portions of the population are unable to access the formal credit systems due to being unbanked and underserved. Authorities have struggled to control the sector with many apps operating illegally, preying on consumers with limited financial literacy, harvesting data from clients and charging extremely high-interest rates.

Trying to police illegal online lending apps is like playing “a game of Whac-A-Mole”, said Niki Luhur, chairman of the Indonesia Fintech Association to The Financial Times, adding that “bad apples” continue to get through.

This clampdown of online lenders has seen the Reserve Bank of India set up a panel dedicated to identifying risks in the sector. Indonesia’s Financial Services Authority has also begun increasing its regulation, drafting proposals to bolster their existing rules. There are talks that it may also force online lenders to secure their funds from offshore investors that are already involved in the financial services sector. Even Google has gotten involved with regulation efforts, pledging to remove non-compliers from its app store.

However, the prospect of a broader clampdown has prompted concerned reactions from fintech companies who fear they will become collateral damage.

“The RBI and government will do anything and everything to protect the consumer. I just hope they don’t go so far that it kills the proposition,” said Upasana Taku, co-founder of Indian loan company MobiKwik.

This call for increased regulation comes after a crackdown of the fintech industry in China over the past few years – including the recent measures introduced against the Ant Group, a dominant player in consumer lending.

Officials and executives are in agreement that such digital lenders can help address a shortage of credit for the regions chronically underserved population, however, authorities agree they must be kept in check to protect consumers.

“The impact of a reckless and unregulated ecosystem could be horrendous,” said Akshay Mehrotra, chief executive of start-up EarlySalary. “The learnings are pretty common from both China and Indonesia. The lending process needs to be above board.”


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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