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🇮🇩 Indonesia /Technology

Tadpole Digital Lending Scheme Criticized as Harmful to Borrowers

From Republika · () Indonesian

Translated from Indonesian and summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Context piece
  • Indonesian lawmakers and a financial economist say the Tadpole repayment model places a disproportionate burden on borrowers at the beginning of a loan.
  • Under the model, borrowers make larger early payments and smaller later ones, which can reduce lenders’ end-of-term default risk.
  • Critics say borrowers should be offered flexible repayment choices, while Indonesia’s financial regulator has limited the scheme as unfair.

Indonesia’s Tadpole online lending scheme is drawing criticism because it requires borrowers to make their largest payments at the start of the loan period, when they may have the least available cash.

Harris Turino, a member of the House of Representatives’ Commission X, said easier access to online loans must come with responsibility from lenders and regulators. Products should be offered transparently and fairly, he said, framing the issue as one of consumer protection and the integrity of the financial services industry.

“The Tadpole scheme places a very large obligation from the loan at the beginning, and then it becomes smaller later. I see this as not merely an issue of online loans, but an issue of consumer protection and the integrity of the financial services industry,” Harris said.

The Tadpole scheme places a very large obligation from the loan at the beginning, and then it becomes smaller later. I see this as not merely an issue of online loans, but an issue of consumer protection and the integrity of the financial services industry.

· Harris TurinoThe Indonesian lawmaker criticized the repayment structure and linked it to broader consumer protection concerns.

Nailul Huda, digital economy director at the Center of Economic and Law Studies, called the model unfair. People seek loans because they need money, he said, so heavier early payments can reduce the practical benefit of the funds they receive. “The Tadpole scheme has been restricted by the Financial Services Authority because it is unfair to borrowers. When borrowers take out a loan, it is clearly because they do not have money at the beginning,” Nailul said.

The model is designed to reduce the lender’s risk of default near the end of the loan. For example, a borrower with Rp1 million in principal and Rp300,000 in interest owes Rp1.3 million in total. Across three payments, the installments could be Rp700,000, Rp400,000 and Rp200,000. That structure pays most of the obligation early, protecting the company if the borrower defaults later, but it increases the borrower’s initial burden.

Nailul said larger early payments should be an option rather than a requirement. Platforms could instead use ordinary installments and improve their credit-scoring systems to assess borrowers more prudently.

The Tadpole scheme has been restricted by the Financial Services Authority because it is unfair to borrowers. When borrowers take out a loan, it is clearly because they do not have money at the beginning.

· Nailul HudaThe digital economy economist explained why he considers the repayment model unfair.
About this summary

Originally published by Republika in Indonesian. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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