OJK: Pawnshops Prohibited from Profiting from Auctions of Unredeemed Collateral

Jakarta, CNBC Indonesia — The Financial Services Authority (OJK) has warned that pawnshop companies are not permitted to take profit margins from the proceeds of auctions of unredeemed collateral items. The Executive Head of Supervision for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Service Institutions (PVML) at OJK, Agusman, stated that auction proceeds are only to be used to settle the principal loan, interest, auction costs, and taxes. “If there is a surplus (from the sale of collateral items), the company is obliged to return it to the customer and record it separately from the company’s finances,” Agusman explained during the RDKB press conference on Tuesday (5/5/2025). Agusman noted that one reason customers fail to redeem their collateral is limited financial capacity to meet obligations at maturity. Therefore, the management of auction proceeds must be conducted transparently and in accordance with applicable provisions. OJK also continues to monitor compliance with these rules through periodic reports from pawnshop companies. These reports include information on collateral items sold and auctioned to ensure that customer rights are returned in line with regulations. As of March 2026 performance, the pawnshop industry recorded a 60% growth in financing disbursements to Rp153.49 trillion. The largest financing was channelled through pawn products at Rp127 trillion, equivalent to 83.33% of the industry’s total financing.