Based on OJK data, in June 2023, Pinjol (Indonesian term for online loans) was widely used by the younger generation. The total amount of loans is considered fantastic, among individuals aged under 19 years worth 168 billion rupiah. The highest from the age of 19-34 years worth 26 trillion rupiah.
With such a large loan, it will be better if the loan is converted into capital that can support productive business activities for MSMEs that should be carried out by generations Y and Z, which has been proven as an economic backbone for Indonesia, exquisitely when the pandemic hit the world on 2020.
Unfortunately, the loan is used for consumptive purposes like for trend lifestyle fulfillment. so the loan is not compensated by the ability to be responsible for making the loan payment.
In fact, Article 25 paragraph (1) of OJK Regulation No. 10/POJK.05/2022 concerning Information Technology-Based Joint Funding Services (“POJK 10.05/2022”) has strictly stipulated that funding can only be provided for productive activities.
Apart from the loans provided not being in line with productive needs, Debt-collecting also uses disrupting methods.
Ranging from the use of uncertified debt collector services to the withdrawal of personal data of the debtor’s phone contacts, so that the collector spreads terror and it interferes with privacy. And quite a few young people ultimately choose to end their lives because they cannot stand the terror carried out by debt collectors

As reported above, a vocational school student in Tuban Regency ended his life by hanging himself. The teenager is suspected of having committed suicide due to the terror of online loan debt collectors (pinjol). He owes IDR 900,000.
Brief History of Pinjol
Pinjol at the beginning of its emergence was considered as a financial solution that was easily accessible to the public, compared to the banking industry which was dense with regulation. Pinjol comes in various forms, although it is based on two types of transactions, both conventional transaction-based and sharia-based.
The opportunity for money-lending business is widely open, many loan sharks have transformed using technology as a Pinjol companies. Moreover, these loan sharks will give birth to many illegal Pinjol companies and creating various problems eventually, so the government in this case the Financial Services Authority of the Republic of Indonesia (“OJK”) had to issue many regulations.
Based on OJK data, the Task Force for the Eradication of Illegal Financial Activities (“Satgas Pasti”) has found and closed also blocked 9062 illegal financial entities throughout the 2017-2024 period consisting of 7576 loan companies, 1235 illegal investment companies, and 251 illegal pawns.
What is the legal status of Pinjol in Indonesia?
Money-lending business is actually legally based on the debt law as stipulated in Article 1754 of the Civil Code (“KUHPer”) which states:”Consumable Lending is an agreement, which stipulates that the first party delivers a number of consumable goods to the second party on condition that the second party will return similar goods in the same quantity and condition“.
Money -lending is basically an act of helping who is charged with rights and liabilities, a person who is given a debt loan must have awareness of the obligation to repay the debts.
Substansial legal questions arise such as “can I not pay illegal Pinjol?”, “legally, what should be done if dealt with illegal Pinjol?”, “can I bring charges to police against Pinjol company who has hijacked my personal data and made illegal debt-collection?”.
Illegal Pinjol is translated not as a company that collects in a way by breaking the law or a financial services company that applies interest, fines, and various kinds of sadistic entanglements that actually harm the community. However, illegal Pinjol is a financial services company that operates without having a complete license from the OJK.
It can be interpreted that borrowing from illegal Pinjol, means borrowing from loan sharks around the village that usually appears in soap operas, if someone can’t pay the debt even if the amount is small, but the house will be confiscated by loan sharks so that forcibly evicted, And the whole village will know of its inability to payback the debt. A rhetoric social sanctions that is occurring nowadays.
The existence of illegal Pinjol is like eggs and chickens, on the one hand sometimes people already know there are traps, on the other hand illegal Pinjol Company is desperate to distribute its funds to the community in the hope that the community will be frightened along with threats to disclose their debts to everyone they know.
This is what young people must do to avoid being exposed to illegal loans
Each person must be able to detect illegal Pinjol by knowing its characteristics, as stipulated in OJK regulations, as follows:
- Does not have complete licenses from OJK;
- The lending process is very easy and fast;
- The application requests all data access on the mobile phone such as: contacts, memory storage, and call history;
- Very high loan interest and fines for which information is not clear;
- Use of threats, insults, defamation, distribution of photos/videos in collecting debt;
- The identity of the management and the office address are unclear;
- Offers through private communication channels such as via WA, sms, and/or social media.
Regarding illegal Pinjol activities, OJK asks the public to report the institution through the OJK contact service 147 or through WA +6281157157157.
If it is proven that the loan is illegal, young Indonesian people who are victims can apply for cancellation of the agreement to the competent District Court and its jurisdiction regarding the cases mentioned above.
Furthermore, even though the agreement has been revoked through the court, but the illegal Pinjol Company has provided funds to the debtor, therefore it does not eliminates the obligation to pay the debt, otherwise the debtor can commit an event of default if does not return the loan
Youth, Pinjol, And the future of the Indonesian economy
The large proportion of Indonesian youth or what we can see in the data above is the proportion of Gen Z, this can benefit Indonesia’s grow economically because its productive age will be much higher. However, Indonesia’s gold asset can also be a boomerang if it is not anticipated or prepared well.
Like the one with the Pinjol case. The importance of understanding good financial literacy is very necessary for young Indonesians. So that extreme cases due to the impact of pinjol can be avoided.
On the other hand, the Government must also be firm in responding to and regulating loans. Don’t let Indonesian youth, who are the nation’s golden capital and hope to prepare Indonesia to become an Asian economic power, become targets for irresponsible loan exploitation. So it doesn’t give birth to a golden generation but instead an anxious generation