- 0.92%% Default rate
- Last Update: August 2019
Provision Fund is provided by PT Lunaria Annua Indonesia, an affiliated company in partnership with PT Lunaria Annua Teknologi. PT Lunaria Annua Indonesia and PT Lunaria Annua Teknologi agree on the Receivables Transfer Agreement. In this case, PT Lunaria Annua Teknologi will act as the authorized beneficiary of the Lenders to sell the receivables to PT Lunaria Annua Indonesia.
PT Lunaria Annua Indonesia will take over the collection responsibility to the defaulted Borrower. Upon stated as default, PT Lunaria Annua Indonesia will continue billing the respective Borrower and any payment received will be allocated into Provision Fund. The available Provision Fund will be disbursed to minimize the loss of a Lender’s capital whenever a Borrower default.
Although KoinWorks uses a very rigorous credit assessment on each loan, lending activity has various risk levels and the risk of default may occur over time.
Please keep in mind that the Provision Fund provided by PT Lunaria Annua Indonesia is not an assurance/warranty of lending safety and the amount is limited, and not covered or mandated in government regulations. Partnership between PT Lunaria Annua Teknologi and PT Lunaria Annua Indonesia on Provision Fund can be terminated at any time. Along with the increasing number of borrower defaults, the limited Provision Fund may be exhausted from time to time so that it can not be used to minimize the loss of Lenders’ capitals. Lending through a peer to peer lending (P2P Lending) platform is also not guaranteed by Indonesia’s Deposit Insurance Agency (LPS).
How Does Provision Fund Work?
Nett deficit between initial capital/principal allocated on a loan with the total repayment received from the loan.
- - Lender allocated IDR50,000,000,- into a loan
- - Borrower has paid the installments for 4 months with the total amount of IDR10,000,000,- before being defaulted, so
The amount of Provision Fund disbursed will be determined by the total amount of capital loss multiplied by percentage of a loan Grade.
Provision Fund = % Grade x Capital Loss
So if the Grade of the loan default is A, then the Provision Fund will be disbursed 100% of the Capital Loss,
ie 100% x IDR40,000,000 = IDR40,000,000. It will continue like that up to Grade E, ie 20% x IDR40,000,000 = IDR8,000,000.
Grade & Provision Fund Percentages
Grade is the credit score set for each loan after the KoinWorks team conducts a comprehensive creditworthiness assessment.
In mitigating the risk for Lenders, KoinWorks believes that diversifying the funding into several loans with various Grades and loan types all at once is the best method to lend money through KoinWorks.
KoinWorks as a P2P Lending service provider will conduct regular review of the loan credit performance and continuously update the policy of this Provision Fund.
How Does KoinWorks Manage the Risks?
Tight Process in Assessing Credit Eligibility
The credit assessment method we use is the combination of method used by bank, innovative Machine Learning, and Sciences on Big Data.
Managing the total number of loan portfolios to ensure that every loan is distributed evenly into different industries and market levels.
KoinWorks is actively working together with reputed partners for reducing the risk levels and to increase the quality of credit assessment. We are working with several e-commerce platforms, insurance company, and credit bureau.