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Economy

Bank Indonesia draws up rules to monitor fintech

Central bank plans legal framework to prevent 'shadow economy' forming

Headquarters of Bank Indonesia in Jakarta (Photo by Ken Kobayashi)

JAKARTA -- Bank Indonesia is stepping up efforts to draw up a regulatory framework for emerging financial services in the wake of a surge in online payment services.

Ida Nuryanti, policy and payment system supervision director at Bank Indonesia, on Thursday said the central bank would issue new regulations as early as this month that would keep in check new fintech services that do not fall under existing licensing regimes.

The regulations will allow unregistered fintech startups to participate in a so-called "regulatory sandbox," a six-month program to test their services under the supervision of Bank Indonesia, who will then determine whether those services can be rolled out commercially.

"BI has regulations on e-money and payment transaction process," Nuryanti told reporters. "If they offer new kinds of services, BI can develop new regulations."

BI's role as a regulator has come under the spotlight in recent weeks after it ordered the suspension of the top-up function in electronic wallets for e-commerce services companies Tokopedia and Shopee, ride-hailing app Grab, among others. In a country where the majority of the population does not carry credit cards, e-wallets have become increasingly popular as a way to pay for online shopping and taxi rides.

Grab recently suspended the use of the top-up function of its electronic wallet.

E-Wallet service providers with active users of 300,000 or more are subject to BI licensing, according to a regulation introduced in November 2016. Most operators of the suspended services said they were in discussions with the central bank to obtain licenses, and that users were still able to access the remaining balance in their e-wallets.

Junanto Herdiawan, who heads the central bank's fintech office, said these companies fall under the traditional licensing framework and would not be required to take part in the sandbox program.

This year, e-money transactions had already reached 6.6 trillion rupiah ($488 million) as of August -- 94% of 2016's figure, according to BI data. Nuryanti warned that the growing interconnectivity of fintech services can create "systemic risks" in the financial system.

"If fintech [services] grow, and they have high transactions and high interconnectedness, while they are not registered and we can't monitor them, there will be a shadow economy," she said. "Consumer protection must go on."

Erwida Maulia in Jakarta contributed to this story

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