Pawning is one of the collateralization schemes generally used by the public if they need quick funds. As pawning capitalizes movable objects, people have the option to obtain a loan based on the estimated value of the collateral.
By providing financial services to the public, pawning business has given relatively significant contributions to the Indonesian economy. In order to increase the financial coverage for small and medium enterprises (MSMEs) and lower middle class people, the FSA sees the need for a legal basis in order to create a sound pawnshop business atmosphere. Moreover, the existence of legal basis means providing legal certainty to business actors as well as protection to customers.
To accommodate the aforementioned matters, the FSA has issued Regulation of the Financial Services Authority Number 31 / PoJK.05 / 2016 concerning Pawning Business (“POJK 31/2016”) to ensure the security of the business. The regulation provides for as follows:
1. The pawning company Furthermore, pawning companies are also required must be in the form of a limited liability company or cooperative.
2. The minimum amount of capital participation in conducting pawning business is Rp 500,000,000 for the scope business area covering a regency / city, and Rp2,500,000,000 for the scope of business area covering a province. That amount is considered sufficient by the FSA for enterprises to engage in business in the field of pawning at local and provincial levels.
3. POJK 31/2016 requires pawning companies to disclose the interest rate on the loan offered clearly and transparently in each service unit. That way, people can choose the lowest interest rate from numerous pawning companies which is expected to create fair business competition among companies.
4. Furthermore, pawning companies are also required must be in the form of a limited liability company or cooperative to have at least 1 (one) appraiser who has passed the collateral assessment certification exam to estimate the value of the collateral in each service unit. However, customers may lodge a written request to the pawing company they wish to be given a loan fund lower than the estimated actual value of the collateral.
Apart from all the provisions set forth in POJK 31/2016
as mentioned above, direct involvement of the FSA in pawning business is expected to give a sense of security and legal certainty for customers and companies since pawning business is now under the direct supervision of the FSA.