Jakarta Court Overturns KPPU Online Lending Decision, Separates Sharia and Conventional Markets
The Commercial Court of Central Jakarta has overturned an online lending decision by Indonesia's competition watchdog, ruling that sharia-based and conventional services cannot be treated as interchangeable. The judges also distinguished an interest rate ceiling from prohibited price fixing.
Ruling follows case against 97 lenders
The court upheld business operators' objections to KPPU Decision No. 05/KPPU-I/2025, dated March 26, 2026. Central Jakarta District Court spokesperson Sunoto said in an October 23 press release that the ruling had been announced in an open court session on October 22.
KPPU's decision had found 97 peer-to-peer lending businesses in violation of the price-fixing provisions of Article 5 of Law No. 5 of 1999. The commission imposed combined fines of Rp 755 billion when it delivered the decision at a panel hearing in Jakarta on March 26, 2026.
The enforcement process began in 2023, and a preliminary examination took place on August 14, 2025. KPPU described the case as one of its largest, measured by both the number of parties involved and the breadth of the industry covered.
Why the court distinguished sharia lending
A central issue was KPPU's treatment of the interest rate caps in the Indonesian Fintech Peer-to-Peer Lending Association's (AFPI) guidelines as applicable to both conventional and sharia operators. The judges rejected that approach, finding that some businesses offered services that could not substitute for one another.
The panel pointed to differences in how the two lending models operate. Sharia principles do not recognize interest in the way conventional lending does, and sharia operators are overseen by a Sharia Supervisory Board. The judges therefore concluded that grouping the two markets together did not satisfy the relevant-market requirements for the competition case.
The regulatory framework also provides for separate sharia governance. A 2025 study in the Journal of Social Science and Economics explained that OJK Regulation No. 40 of 2024 allows peer-to-peer lenders to establish Sharia Business Units, subject to approval from the Financial Services Authority (OJK) and supervision by a Sharia Supervisory Board. These units operate under separate governance structures based on sharia fatwas.
Citing OJK data, the study reported that about 13 of Indonesia's 102 registered peer-to-peer lending platforms were sharia-based, making the segment much smaller than conventional fintech.
Rate ceilings and the regulator's role
The court separately found that imposing an upper limit on interest rates was not prohibited price fixing. In the judges' assessment, a ceiling protects borrowers from lenders arbitrarily setting interest rates. The panel also considered OJK's role in regulating those limits.
OJK said it had used AFPI's code of conduct to regulate the maximum economic benefit, or interest, on online loans before issuing Circular Letter No. 19/SEOJK.06/2023. The authority also cited Article 84 of OJK Regulation No. 40 of 2024, which requires associations such as AFPI to support supervision based on market discipline and ensure members observe the limits.
The 2025 Journal of Social Science and Economics analysis traced AFPI's consumer-loan ceiling from 1% per day in 2018 to 0.8% per day in 2020, 0.4% in 2023 and 0.3% in 2024.
OJK's May 20, 2025 press release set out daily caps on economic benefits, including interest and fees. Consumer loans carried a ceiling of 0.3% for terms of up to six months and 0.2% for longer terms. For productive loans, the limit was 0.275% per day for micro and ultra-micro borrowers with terms of up to six months, and 0.1% per day for small and medium borrowers.
A later circular changed the regulatory framework. According to a September 23, 2025 client update from law firm Assegaf Hamzah & Partners, OJK issued Circular Letter No. 19/SEOJK.06/2025 in July 2025 to replace the 2023 circular. It substituted fixed caps tied to loan type, value and term for the earlier gradual rate-reduction model, with full compliance required by January 1, 2026.