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Indonesia allows banks to invest in fintechs

The Financial Services Authority (OJK) of Indonesia has issued a regulation standardising banks’ investments in fintech companies in response to a booming digital finance sector. The new regulation stipulates that a bank can invest a maximum of 35% of its capital in fintech. The bank must also come up with a formal procedure to manage the risks from its investment. The OJK said capital injection has to be balanced with a higher quality of risk management to anticipate potential risks that could affect the bank’s sustainability. It said that the new rules apply to direct investments or purchases through the stock exchange. As of September, data from OJK showed that outstanding loans from fintech totalled IDR48.73tr, up 77% from the same period last year.

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