Indonesia regulators are voicing concerns over rising illegal loans amid a flurry of online lending activities, signalling measures to step up supervision of the sector.

Unregulated borrowings in Indonesia have outstripped that of their legal counterparts. Turnover of illegal online loans in Indonesia is estimated, according to a study by the Indonesian Joint Funding Fintech Association ( AFPI ), at 230 trillion rupiah ( US$14.3 billion ) to 260 trillion rupiah.

That’s three times, according to the Indonesian Financial Services Authority, the registered peer-to-peer ( P2P ) lending of 80.94 trillion rupiah record in June.

Although the country recorded a legal loan uptick since February, it has been offset by the burgeoning growth of unregistered lending platforms backed by compelling promotions and the readily available capital, despite concerns about unethical debt collection practices and potential violations of personal data.

The robust growth of illegal lending is also due to the tight liquidity among banks, paired with a cautious lending approach among licensed lenders. Banks surveyed by CGS International indicate higher rejection rates and increased down payment applied to auto loans, signalling further decline in banks’ consumer credit business.

Regulators, therefore, are doubling down on their effort to combat unauthorized lending.

In addition to the 1,100 online lending entities eliminated during the first five months of 2025 by the Indonesian Financial Services Authority ( OJK ), the AFPI and the Ministry of Communication and Digital Affairs state, during a recent public discussion held at the Centre of Economic and Law Studies in Jakarta, that they are seeking to shorten the takedown process of unauthorized lenders without the approval of the OJK.

As well, the government has consolidated the data protection law to cover the lending sector.

To balance the lending risk, the OJK has also implemented regulatory changes on P2P lending, with tightened oversight on their minimum capital, equity, liquidity and non-performing loan requirements.

And the central bank has lifted the reserve requirement on banks to ease the liquidity burden to provide flexibility for consumer credits.