P2P Lending Startup "Danain" Offers Gold as Collateral Loan

Among the hype of p2p lending players in Indonesia, there is a well-executed opportunity with a different approach than any other player. This is what the p2p lending startup Danain took advantage from, by using collateral for loan requirement.

"As the founders' philosophy, where we always put security first for our lenders, therefore, we build the fintech with a different approach. We always require collateral in Danain services," Budiarjo Rustanto, Danain's Co-Founder and CEO said to DailySocial.

He explained, unlike the other p2p players, Danain requires the borrowers to have collateral with loan value up to 86% of the collateral. Assessment and collateral storage will be performed by a competent private pledge partner from Danain. Items for collateral can be a gold in the form of jewelry or precious metals.

According to the workflow, borrowers will pledge the collateral for value assessment and disburse the loan to the borrowers. Furthermore, with the borrowers' approval, the data and transactions are taken by Danain platform to meet the willing lenders.

When the lenders agree, the fund will be distributed to partners which already disbursed the loan to the borrowers. After the borrowers repay the loan with interest, partners will return the fund with interest to the lenders.

The maximum amount for the loan depends on the value of gold pledged by the borrowers, with an interest rate of 8% per year and 4 months maximum tenor.

"After deducting management fees for partners and Danain platform, lenders will get interest from its transaction of minimum 8% per year."

Rustanto ensured this method can reduce the risk of bad loans. Danain bad loan risk is claimed to be 0%. Another factor is a competent pledge partner in item's assessment.

Danain's pledge partner is PT Mas Agung Sejahtera (MAS), a registered private pledge company supervised by OJK, which is Danain's parent company. In fact, Danain has registered since April 2018. The business operational started in November 2017.

MAS is a pledge company with more than 50 branches all over Indonesia. It is a subsidiary of Serba Mulia Group which has been operating for 40 years with various business lines of automotive to financial.

Business target

The CEO said since operating last year, Danain has acquired more than 1,000 borrowers with total distributed funding of Rp5 billion. The borrowers are from several MAS branch offices in Jakarta, East Java, Bali, and West Nusa Tenggara. The lenders are mostly located in Jakarta, East Java, and Kalimantan.

Until next year, Danain targets 15 thousand borrowers. The loan distributed up to Rp120 billion.

"The target distribution for next year should be optimistic, three times of this year."

In his opinion, with a trusted background, he believes Danain can participate in fintech company socialization and education, p2p lending in particular.

"We always emphasize on Danain commitment in maintaining our business reputation and highly careful in running the business. It becomes the foundation of all our business decision along with our holding reputation," he concluded.

– Original article is in Indonesian, translated by Kristin Siagian