Peer to Peer Lending, Fun Can Be Credit Through the Internet
Peer to Peer Lending (also called abbreviated P2P lending), is the practice of lending money to individuals or businesses through online. So the website of P2P lending service providers will match between the person who borrows (the debtor) and the prospective investor (creditor).
In Indonesia, maybe not too many P2P lending websites. The Financial Services Authority (OJK) is very careful with lending and borrowing activities. OJK seeks to prevent the practice of loan sharks ( loan shark ), preventing the loss of society ( investors ). If we examine more deeply, practice First, the practice of Peer to Peer Lending, involves at least 3 parties:
- Party 1: people who borrow money (debtor)
- Party 2: the person giving the loan (creditor)
- Of course there are other parties ( stakeholders ), such as the government.
Anything Luckily Peer to Peer Lending?
Let’s discuss one by one peer to peer lending advantages from each party:
Prospective debtors will naturally have access to funds. No need to bother with banking rules and systems. There are several websites for P2P lending service providers that provide fixed interest rates, fixed payment periods, no penalties for accelerated repayments, no hidden fees and fast processing. In essence, prospective borrowers get easy access to funding.
People who give loans (creditors) certainly benefit from interest and return on capital. P2P lending schemes can also be used as an investment, with fixed investment returns. Indeed, the P2P lending scheme has similarities with Bond investments. Of course there are modifications in terms of the system and technology used.
Website P2P Lending providers certainly benefit from some of the interest paid by the borrower. There are also some websites that charge administrative fees to borrowers.
What are the risks of Peer to Peer Lending ?
The practice of peer to peer lending is also rife in China, as one of the financing alternatives for MSME entrepreneurs. Because of the large number of P2P lending service provider websites, the Chinese government has made restrictions. The government tightened the rules of the website for P2P Lending service providers. The main fear is the risk of debt that cannot be paid ( bad debt or non-performing loan ).
Financial institutions (banks, micro-credit institutions) in China are asking the government to rearrange P2P Lending regulations. It is feared that the websites of P2P lending providers provide credit to people who are not eligible for credit (NINJA – No Income, No Job, No Assets), thus potentially becoming a bubble.
Will the Peer to Peer Lending Website Grow in Indonesia?
We ourselves cannot ascertain whether the website of a P2P lending provider can be present in Indonesia. If viewed by the market or opportunity, it must be very big. Indonesia is a developing country, with a growing number of MSMEs. On the other hand, the government, through the Financial Services Authority (OJK) will certainly oversee the practice of this P2P lending website.