The Indonesian Financial Services Authority or Otoritas Jasa Keuangan recently passed regulation no 77/2016 on financial IT which lays out some basic requirements for companies that might benefit from its new rules.

The regulation, which regulates peer-to-peer (P2P) lending for the first time, came in on 28 December. Before that date P2P lending companies were not required to obtain a special business licence and obeyed the Indonesian civil code alone. It now defines a P2P platform as an IT-based loan service provider and as a financial institution.

Indonesia, too, has created a so-called 'regulatory sandbox' along British lines, allowing start-ups to benefit from a reduction in regulation to help them with costs. A firm that is about to commence business can register to operate a P2P platform and the OJK will approve or disapprove within ten days. This registration is far less onerous than an application for a licence. New firms do not have to make a fund placement in a time deposit account. Instead, they must have capital of one billion rupiah (US$74,239) at registration and this must grow to 2½ billion when it applies for a business license.

Late last year 120 fintech firms were operating in the country, most of which were start-ups. These were not only in the P2P lending business but also in financial funding, financial settlements and e-wallets.

A year after it registers with the OJK, the P2P firm has to apply for a so-called provider license and must from then on submit annual business plans, obey the full panoply of anti-money laundering and submit statements from the management members. The OJK has 20 days to approve or disapprove.