KoinWorks created 'protection fund' to protect lenders

KoinWorks.com protects investors' losses by a "protection fund" scheme to settle a defaulted loan. Indonesia's lending peer-to-peer (P2P) start-up use the protection fund feature to compensate for fund losses by lenders after non performing loans (NPLs) for the first time.

Tinuku KoinWorks created 'protection fund' to protect lenders

KoinWorks co-founder and CEO, Benedicto Haryono, said the protection fund was created to minimize investor capital losses if the loan defaulted. The amount of this compensation is calculated based on the loan grade being invested.

"As a financial company, we always focus on user protection. We provide a protection fund feature that provides protection to cover some of the losses of investors," said Haryanto.

KoinWorks has raised a protection fund of up to Rp1.2 billion (US$90,518) taken from a portion of the company's profits. The amount is the net value since the company began running in mid-2016. The protection fund feature is an initiative of KoinWorks itself to protect investment funds up to 100%.

A loan is categorized as a default when the borrower is late in paying the installment for 90 days and does not provide information regarding their delay. Capital losses are calculated from the difference between the original amount of capital and the total installments already received.

KoinWorks COO, Bernard Arifin, said the company will send a warning and billing statement over the phone if the borrower does not pay for 90 days. If there is no response the company will visit the borrower's home, then take legal action.