Indonesia’s Investree has terminated its Shariah business operations since January 2023 in preparation of setting up a standalone Islamic unit.
“Investree Group is in the process of creating a separate business entity (spin-off) for Shariah-based financial services for us to register with the Financial Services Authority (OJK). Referring to POJK 10/2022, OJK regulates that conventional fintech lending providers may only run conventional business units separately from Shariah business units,” Adrian Gunadi, co-founder and CEO of Investree, explained to IFN Fintech in a statement. As per the regulation, any conversion will require an approval from the OJK.
The spin-off will be operated under a different legal entity from Investree Radhika Jaya. Further details related to the spin-off process will be disclosed in due time, Adrian said.
“In conducting business activities, Investree always follows applicable regulations and urges the public to always use fintech lending services that have been licensed by the OJK. Since 2017, Investree Syariah has been committed to empowering more MSME actors through Shariah-based products and services and involving lender friends to take part in this mission which is full of blessings. But now, it’s time to say the words, ‘see you later’,” the company wrote in a social media post when it first announced the termination of its Islamic business.
It reassured the public that it will continue to honor existing Islamic financing and funding.
Investree was one of the earliest P2P platforms in Indonesia to have been awarded a regulatory license to offer a Shariah compliant version of its conventional business. Islamic financing constitutes almost 4% of Investree’s lending business: as at the end of December 2022, it disbursed IDR12.56 trillion (US$822.37 million) in loans, out of which IDR484.5 billion (US$31.73 million) were Shariah compliant.
There are approximately 27 Islamic P2P and crowdfunding platforms in Indonesia as at the 22nd February 2023, according to the IFN Islamic Fintech Landscape.
This article was updated on the 26th February 2023 to reflect Adrian Gunadi’s comments.