The wooden vessel was travelling on Lake Toba, a popular tourist destination on Sumatra island, when it capsized Monday afternoon.
At least one person has been found dead and 18 others were rescued, authorities said.
But local officials said dozens of people are likely still unaccounted for nearly a day after the sinking.
“There are 65 people who say their relatives are missing. So we are now searching for them,” Riadil Lubis, head of North Sumatra disaster agency, told AFP.
Authorities said they believe the ferry that sank on Lake Toba was operating illegally with no manifest or passenger tickets.
It was not clear if any foreigners were on board.
TV footage from Monday showed a group of passengers bobbing in the choppy water as a rescue boat approached.
Grief-stricken relatives waited for news, including one survivor who lost hold of her child in the confusion.
“It happened so quickly,” Juwita, who like many Indonesians goes by one name, told TVOne.
“I wanted to grab my child but I couldn’t. There were three people stacked on top of him.”
The search was called off Monday evening due to bad weather and low visibility, but it resumed Tuesday morning with about 350 personnel involved in the rescue effort.
Muslim-majority Indonesia has been celebrating the Islamic festival of Eid since Friday and millions go on holiday during the festivities, with Lake Toba a key tourist destination.
The lake fills the crater of a supervolcano that is believed to have erupted tens of thousands of years ago.
Maritime accidents are common in Indonesia, a 17,000 island archipelago nation where many depend on ferries and other boats to get around, despite lax safety standards.
Last week, a traditional wooden boat with about 40 people capsized in the island of Sulawesi, killing more than a dozen people.
In 2015, a ferry sank near Sulawesi island leaving 78 people dead.
Published in Daily Times, June 20th 2018.
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