P2P lender Amartha targets Southeast Asia expansion

Andi Taufan Garuda Putra (center), CEO and founder of Amartha, at the Money 20/20 conference held in Bangkok in April / Photo credit: Amartha

Indonesian fintech firm Amartha is eyeing opportunities to expand across Southeast Asia, where many microentrepreneurs face challenges such as limited credit access and low levels of financial digital literacy.

In an interview with Tech in Asia on the sidelines of this year’s Money 20/20 conference, Amartha CEO and founder Andi Taufan Garuda Putra said his company can capitalize on its experience of underwriting loans for Indonesia’s grassroots segments on a large scale. However, he did not specify Amartha’s target markets in Southeast Asia.

Meanwhile, Otoritas Jasa Keuangan (OJK), Indonesia’s financial services authority, has tightened its grip on lending.

While the OJK has lowered interest rate limits to prevent predatory practices, Taufan noted that this regulation is primarily aimed at consumer loans, which are used for purchases that don’t generate income. Amartha focuses on productive loans for small businesses and entrepreneurs, which pose lower risks.

Founded in 2010, Amartha almost collapsed before pivoting from conventional microfinance to peer-to-peer lending in 2015. The company said it has been profitable in the last three years on a net income basis.

Amartha operates a marketplace that links borrowers, particularly those in lower-tier cities outside Java, with institutional and individual lenders. Taufan explained that the company typically receives 60% of the interest rate, while lenders get 40%.

While Amartha uses its own credit scoring system, it employs field agents to assess borrowers and their assets, for example. Taufan mentioned that borrowers from lower-income backgrounds often show more responsibility and appreciation for the loans.

In 2023, Amartha secured commitments of US$285 million in MSME financing from Community Investment Management, International Finance Corporation, and Credit Saison.

Taufan did not rule out the possibility of doing an IPO in the future, noting that “it’s a milestone we want to achieve.”

See also: How Amartha went from near collapse to become a top P2P lender in Indonesia