OJK Reports Increase in Buy Now, Pay Later Defaults
Jakarta. The Financial Services Authority (OJK) reported an increase in non-performing financing (NPF) for buy now, pay later (BNPL) loans, a form of consumer credit that lets shoppers split purchases into installments.
Agusman, OJK's chief executive for the supervision of financing institutions, venture capital firms, microfinance institutions, and other financial services providers, said the NPF ratio for BNPL financing rose to 3.44% in May from 2.99% in April.
"The increase was influenced, among other factors, by the declining repayment capacity of some borrowers," Agusman said in a written statement on Friday.
Despite the deterioration in asset quality, Agusman said OJK is urging finance companies to strengthen risk management by improving credit-scoring models, closely monitoring loan quality, and enhancing collection efforts to keep bad loans under control.
The regulator has also issued a new regulation, PADK No. 2/2026, governing BNPL services offered by finance and sharia finance companies. The rule requires lenders to adopt stricter prudential standards, including more robust credit-scoring practices, to support healthier and more sustainable lending.
"The regulation is expected to improve financing quality and help keep BNPL credit risk under control," Agusman said.
BNPL lending, however, continues to expand rapidly despite rising defaults.
According to data from Indonesia's Financial Information Service System (SLIK), outstanding BNPL loans provided by finance companies rose 53.78% year-on-year to Rp 13.18 trillion ($730.3 million) in May, following 56.92% annual growth to Rp 12.93 trillion in April.
As loan growth outpaced repayment quality, the value of non-performing BNPL loans increased from Rp 387 billion in April to Rp 453 billion in May, indicating the growing risks in Indonesia's fast-expanding pay-later market.
Separately, OJK has announced that financial services providers other than banks and finance companies must discontinue BNPL services by Dec. 31, 2027, reinforcing a rule that only banks and licensed finance companies will be allowed to offer pay-later products.
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