Modal Rakyat Supports Financial Inclusion in East Java

A fintech startup engaged in peer-to-peer lending (P2P Lending) PT Modal Rakyat Indonesia (Modal Rakyat) has officially opened a branch office in Surabaya.

The opening of this branch office is one of the strategies for the fintech startup to expand the reach of financing while inviting more financiers to support micro, small and medium enterprises (MSMEs) in Indonesia.

“We want to reach out and participate with the central government to continue to support economic development towards Eastern Indonesia,” said Hendoko Kwik as President Director of Modal Rakyat.

Modal Rakyat sees the growing industrial potential in East Java (Jatim). Moreover, according to the company, this potential is strengthened by the construction of three new industrial areas in Nganjuk Regency, Ngawi Regency, and Madiun Regency.

In addition, in terms of economic growth in Quarter II-2021, East Java experienced an increase of 2.26 percent.

“The opening of the Modal Rakyat branch office in East Java will be the first milestone in our presence in East Java, with the hope of serving the growth of MSMEs in East Java, Bali and Nusa Tenggara,” said Hendoko further.

Total Disbursed Financing

Until now, Modal Rakyat has distributed a total financing of more than IDR 3 trillion for 27,000 MSME players throughout Indonesia. Based on data as of November 2021, the number of lenders in Modal Rakyat has reached 12,743 since the company was founded in 2018.

In Surabaya and East Java, the total distribution of People’s Capital financing reached Rp. 38.8 billion from IDR 53.2 billion (loans). Modal Rakyat has collaborated with PT BPR Masyarakat Mandiri or better known as Bank MM which is located in Sidoarjo, East Java.

In addition, Modal Rakyat has established partnerships with 25 other financial companies, including banking, rural banks, multi-finance companies, financing companies, and other legal entities.

“We will be more active in collaborating with banks, rural banks, and multi-finance companies in East Java and Bali-Nusra (Nusa Tenggara) so that we can move together with Modal Rakyat in building digital financial inclusion,” said Hendoko.

Youth Campaign Against Illegal Fintech

Current technological developments are increasingly reaching all fields, one of which is in the financial industry. One product that is quite widely used by the public today is Fintech Peer-to-Peer Lending (P2PL) or better known as ‘online lending’.

According to data recorded as of September 2021, the total loans distributed to online loan users stood at IDR 265.62 trillion with 104 fintech lending providers registered and licensed by the Financial Services Authority (OJK).

To encourage the level of financial literacy and inclusion in East Java, PT Modal Rakyat Indonesia (Modal Rakyat) and PT Kredit Plus Teknologi (Pinjam Gampang) initiated a fintech lending industry program and collaboration.

This is done in order to increase inclusion and digital financial literacy, both nationally and regionally through a national webinar, Wednesday (12/22/2021) with online students of the Surabaya State Electronics Polytechnic.

Capital People’s Credit & Product Manager Yohanes Rico said that his party hopes that through various digital financial inclusion and literacy programs as well as this educational process, the young generation and East Java consumers and MSMEs can better understand the role and use of fintech lending.

Data from the Investment Alert Task Force (SWI) also revealed, in the October 2021 period, as many as 116 illegal lending entities were blocked. This means that the total platforms that have been closed since 2018 have reached 3,631 illegal loans.

The Legal & Compliance Manager for Easy Loans, Ribka Adelina, added that the public must remain vigilant when they want to borrow money through online loans, because many providers are still illegal.

The Indonesian Joint Funding Fintech Association (AFPI) as the fintech lending association also supports the active role of the fintech lending platform which also voices the 5M movement.