Thursday 05 October, 2023

IGrow responds to lawsuit, OJK chimes in

Former retail lenders at the Indonesian agricultural financing startup are said to have suffered losses amounting to around US$33.4 million.

iGrow farmer

Photo credit: iGrow

iGrow has responded to a lawsuit filed by 40 former lending partners, who claimed to have suffered losses amounting to more than 503 billion rupiah (US$33.4 million).

“Regarding the lawsuit filed by the retail lenders, iGrow is committed to following and discussing the resolution process in accordance with the relevant laws and regulations,” Rizcky Alfath, vice president of consumer growth group at iGrow, explained in a written statement provided to Tech in Asia Indonesia. 

The lenders filed the lawsuit with the South Jakarta District Court in June. The initial trial, originally scheduled for June 28, has been postponed until July 18.

The Indonesian peer-to-peer lending firm for farmers, which is owned by fintech firm LinkAja, said it has implemented several action plans to resolve the issue of non-performing loans.

These plans include engaging in discussions and coordinating with relevant parties. IGrow also discussed legal avenues with borrowers to resolve the issue and make sure the funds invested will be promptly returned to the retail lenders.

In a separate interview, Rifqi Zulham, the legal representative of the plaintiffs, responded to iGrow’s statement about fund repayment.

He confirmed the possibility of “a second mediation outside the court” and a subsequent “withdrawal of the lawsuit” as long as there is an agreement between both iGrow and the lenders that won’t put the latter at a disadvantage.

See also: IGrow’s sprouting credit issues disquiet P2P investors

As of July 5, 2023, iGrow’s 90-day default ratio (TWP90) stands at 46.56%. TWP90, which measures the failure for settling loan obligations 90 days from the due date, serves as an indicator of a default.

The amount yet to be collected from borrowers reached 310.9 billion rupiah (US$20.7 million) with a total of 233 active borrowers.

Ogi Prastomiyono, a head at Indonesia’s Financial Services Authority (OJK), explained that the default incidents in iGrow were caused by several factors, including the failure to achieve estimated production targets by borrowers, crop failure in certain projects, and payment delays from fund off-takers.

OJK is examining iGrow’s compliance as a provider of tech-enabled collaborative funding, Prastomiyono said in a press statement. If any violations of applicable regulations are found, then the OJK will “impose administrative sanctions.”

A version of this article was originally published by Mujahid Fidinillah on Tech in Asia Indonesia.

Currency converted from Indonesian rupiah to US dollar: US$1 = 15,040 rupiah.


Shadine Taufik

Fan of all things AI and art.

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