Yunus Husein testifying as an expert for the Government virtually at the material judicial review hearing of Law No. 10 of 1998 on Banking, Monday (9/6/2021) in the plenary courtroom. Photo by Humas MK/Panji.

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Monday, September 6, 2021 | 16:49 WIB

JAKARTA, Public Relations—Banking provisions do not prohibit BPRs (microcredit banks) from taking over/purchasing collateral of customers with nonperforming loans, so they are allowed to join the auction of the collateral, said the Head of Center for Financial Transaction Reports and Analysis Center (PPATK/INTRAC) Yunus Husein as an expert for the Government at the material judicial review of hearing Law No. 10 of 1998 on the Amendment to Law No. 7 of 1992 on Banking.

“The laws and regulations by [the Financial Services Authority (OJK)] and the Bank Indonesia (BI) on BPR through purchase of collateral of customers with nonperforming loans have been in effect for quite some time. This should be continued as something commonplace for justice and legal certainty,” Yunus said at the sixth hearing for case No. 102/PUU-XVIII/2020 on Monday, September 6, 2021.

Also read: Provision Restricting Collateral Purchase by Banks Challenged

Yunus said that although the legal subject in Article 12A of the Banking Law that the Petitioner questioned only mentioned commercial banks, BPRs can join the auction of the collateral of customers with nonperforming loans. He believed that Articles 13 and 14 of the Banking Law regulated the types of BPRs that were prohibited from joining or joining through giro, and not mentioned that BPRs were prohibited from joining auctions.

“Historically, the exclusion of the BPR in Article 12 was because when the article was included in 1998, we were undergoing a crisis, which not only impacted commercial banks but also BPRs. At the time, there was a high number of nonperforming loans, which mostly suffered by commercial banks, so that commercial banks are more in need [of the article]. In addition to the crisis, at the time BPRs were not as advanced as it is today, so there was no need for it [to be included in the auction of collateral],” Yunus said before the hearing chaired by Chief Justice Anwar Usman.

Yunus said that the BPR’s involvement should be understood in the context of credit loans. When applying for a loan, customers are usually required to list a collateral which, in case of them unable to pay for the loan, can be auctioned off.

Also read:

Petitioner of Banking Law Revises Petition

House: BPR Can Buy Customers’ Collaterals Through Auctions

Purchase Through Auction

Yunus added that BPRs must mitigate nonperforming loans as they had a lot of impacts, such as a reduction of the BPR’s asset quality and a reduction of capital as the BPR must have reserve as much as the potential risk of nonperforming loans.

“BPRs can purchase [collateral through] auction based on existing regulations, such as the BI and OJK regulations. This is needed to guarantee the smooth banking business to overcome bad loans,” he said.

He added that any rejection of becoming an auction participant should be the domain of the State Administrative Court (PTUN), not the Constitutional Court as such a rejection was final, individual, and specific, in accordance with the object of the PTUN lawsuit. “Statutory regulations never prohibit BPRs to [purchase] collateral through auction or outside of auction,” he stressed.

Also read:

Bank Indonesia: AYDA, Solution for Nonperforming Loans

Expert: Collateral Takeover, BPR’s Main Instrument Against Nonperforming Loans

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 9/7/2021 10:00 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

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