Executive Director of Legal Affairs Department of Bank Indonesia Rosalia Suci Handayani testifying virtually at the material judicial review of the Banking Law, Monday (2/8/2021). Photo by Humas MK/Ifa.
Monday, August 2, 2021 | 17:55 WIB
JAKARTA, Public Relations—The Constitutional Court (MK) held another material judicial review hearing of Article 12A paragraph (1) of Law No. 10 of 1998 on the Amendment to Law No. 7 of 1992 on Banking Monday, August 2, 2021. The fourth hearing for case No. 102/PUU-XVIII/2020 had been scheduled to hear the testimony of the Relevant Parties, the Indonesian central bank Bank Indonesia (BI) and the Financial Services Authority (OJK).
At the hearing chaired by Chief Justice Anwar Usman, the Executive Director of Legal Affairs Department of Bank Indonesia Rosalia Suci Handayani said as part of the management of a bank’s earning assets, the acquisition and management of the bank’s foreclosed assets (AYDA) must be made one of the ways to settle loans and nonperforming loans.
“Therefore, Article 12A paragraph (1) of the Banking Law on the management of AYDA by commercial banks stipulates that commercial banks may purchase part or all of the collateral, either at or outside an auction, based on voluntary submission by the collateral’s owner or based on a power of attorney outside the auction by the collateral’s owner in the event that the debtor does not fulfill their obligation to the bank, provided that the purchased collateral must be disbursed as soon as possible,” she explained.
Also read: Provision Restricting Collateral Purchase by Banks Challenged
According to Rosalia, Article 12A paragraph (1) of the Banking Law was placed in Chapter III, which regulates commercial banks, so it serves as the basis for loans and credit in commercial banks. She said the subchapter on BPRs (microcredit banks) doesn’t regulate collateral purchase at or outside of auction. This is in line with the transcript of the promulgation meeting of the amendment to Law No. 7 of 2002 on banking, which explains that Article 12A paragraph (1) only regulates commercial banks, and not microcredit banks due to its small size. “If BPRs follow [the provisions] for large collateral, it will be troublesome for them,” she said.
Rosalia added that Article 13 of the Banking Law regulates the business activities of BPRs, which include collecting public funds in the form of deposits, savings, and/or other forms. Other activities such as loans and credit; financing and collection of Islamic principle funds in accordance with the provisions stipulated by BI; and funds in the form of BI certificates, time deposits, deposit certificates, and/or other bank savings.
She also said that AYDA-related activities are inseparable from loans and credit, so they cannot be categorized as independent business activities.
Also read: Petitioner of Banking Law Revises Petition
Misinterpretation
At the hearing, the OJK, represented by Suharjo, testified as the other Relevant Party. Suharjo said the notion that the a quo article was directed to commercial banks and that BPRs cannot purchase debtors’ collateral was a misinterpretation. He added that the purchase of debtors’ collateral by BPRs has not been explicitly regulated in the Banking Law but can be regulated in implementing regulations under the law because BPRs can also provide loans and credit to the public just like commercial banks can.
Suharjo believed that, even if the a quo article regulates commercial banks, no article in the Banking Law prohibits BPRs to purchase collateral at or outside of auctions.
“Bank Indonesia, as the regulator of banking institutions at that time, issued regulations on the purchase of debtors’ collateral by BPRs in Bank Indonesia Regulations on Earning Assets Quality and the Allowance of Earning Assets for BPRs,” he said.
He added that AYDA is the assets that BPR obtains to settle credit, both at or outside of auction, based on voluntary submission by the collateral’s owner or based on a power of attorney in the event that the debtor does not fulfill their obligation to the bank.
“AYDA is one of BPRs’ options in settling nonperforming loans in that an OJK Regulation stipulates that BPRs can take over the collateral of debtors who have nonperforming loans, at or outside of auction,” Suharjo said.
Also read: House: BPR Can Buy Customers’ Collaterals Through Auctions
Executive director of PT Bank Perkreditan Rakyat (BPR) Lestari Bali, Pribadi Budiono, filed the petition to challenge Article 12A paragraph (1) of the Banking Law, alleging that the provision allows only commercial banks to take over the collateral of bad credit customers.
At the preliminary hearing, the Petitioner claimed to have suffered loss due to the enactment of the phrase “Commercial Banks” in the Banking Law, as it allows only commercial banks to take over the collaterals of customers with nonperforming loans through auctions. Meanwhile, BPRs do not have this right. Therefore, the Petitioner feels he has received discriminatory treatment and injustice in obtaining equal opportunity and benefits for equality and justice that commercial banks receive in taking over its customers’ collaterals of through auction to settle their nonperforming loans.
Writer : Utami Argawati
Editor : Lulu Anjarsari P.
PR : Andhini S. F.
Translator : Yuniar Widiastuti (NL)
Translation uploaded on 8/3/2021 12:31 WIB
Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian version, the Indonesian version will prevail.
Monday, August 02, 2021 | 17:55 WIB 1348