OJK plans write-off rules for microfinance institutions, due in Q4 2026

Published 28 Sep 2026Data as of 25 Sep 2026IndonesiaRegulationMFI

OJK plans to insert write-off provisions (Articles 110A–110C) into its LKM regulation, POJK 41/2024.
Conditions: loans classified as non-performing and provisioned at 100%; no partial write-offs, only full write-off per contract.
Issuance is planned for the fourth quarter of 2026.

Facts

Amendment: the Financial Services Authority (OJK) will amend POJK 41/2024 on microfinance institutions (LKM), inserting Articles 110A–110C between Articles 110 and 111 to set procedures for writing off non-performing loans. Issuance is planned for Q4 2026. Source: Indikator Bisnis (25 September 2026).

Conditions: write-offs apply to loans classified as non-performing and require provisioning of 100%. Partial write-offs are not allowed; each loan contract must be written off in full. Institutions that have converted into rural banks (BPR) face restrictions on write-offs unless collection efforts have been exhausted. Same source. ¹

Industry reaction: of two institutions interviewed, BKD Pekalongan has not carried out write-offs, while BKD Ponorogo said the rules are consistent with its internal procedures and the impact will be small. Same source.

Analysis

In Indonesia, the number of finance companies with NPF above the threshold is rising (42 in July, OJK), making the resolution of non-bank problem loans an issue. LKMs are small and have lacked explicit write-off rules, so bad loans tended to stay on the books. The amendment institutionalises the treatment of delinquent loans and will require operations that extend to post-write-off recovery management.

Implications

ExecutivesEven small lenders will need documented criteria for provisioning and write-off decisions.

InvestorsFormal write-offs can lower reported NPF; do not confuse an improved ratio with an improvement in underlying quality.

OperatorsPrepare systems to handle automatic provisioning by days past due and recovery on written-off loans consistently.

Counterpoints and uncertainties

The information is from media reports; OJK's draft amendment text was not reviewed. Article numbers and conditions could change at issuance.

Figures: see definitions

Provisioning required before LKM write-off: 100%. Provisioning coverage a non-performing loan must carry before write-off under the planned amendment to POJK 41/2024. Microfinance institutions (LKM). Basis date: 25 Sep 2026. Source: Indikator Bisnis: OJK Siapkan Aturan Hapus Buku Kredit LKM Terbit Kuartal IV 2026 (2026-09-25)

Sources

Indikator Bisnis: OJK Siapkan Aturan Hapus Buku Kredit LKM Terbit Kuartal IV 2026 (2026-09-25)

Reports are for information only and are not investment advice. Methodology: sources, verification and definitions