For loan recipients (debtors), installment payment problems or bank collectivity (kol) problems can occur. Even worst, the status of the kol can become default or default. When the Bank declares the credit default or bad debt, the debtor must know his rights as a debtor and his obligations to the Bank as a creditor.
What is Non Performing Loan (NPL)?
Financial Services Authority Regulation No. 40/POJK.03/2019 on Asset Quality Assessment of Commercial Banks (“POJK 40/2019”) defines bad debts or non-performing loans as loans with “bad” quality (collectability 5), which is a condition where the debtor is unable to fulfill its obligations for more than 180 days.
NPL or collectibility five is a condition where a debtor:
– Has been in arrears for more than 180 days,
– Does not show prospects of returning credit,
– Has experienced total failure in its business, and
– Does not have good faith to repay its credit obligations.
Creditor Rights and Obligations
Creditor Rights:
– Right to Payment
– Right to Collateral
– Right to Sue
– Right to Earn Interest
Creditor Obligations:
– Provide Loan
– Comply with the Agreement
– Provide Proof of Payment
Rights and Obligations of Debtors
Debtor Rights:
– Right to a Loan
– Right to Clarity
– Right to Legal Protection
Debtor Obligations:
– Pay the Debt
– Provide Guarantee
– Comply with the Agreement
The jurisprudence of the Supreme Court in decision No. 2899 K/Pdt/1994 dated February 15, 1996 confirms:
“A bank that has declared a loan bad, then at that time, the credit must be status quo and therefore it is no longer allowed to add interest.”
Thus, any attempt to increase the interest burden after the credit has been declared NPL is not justified by law.
Legal Consequences for Debtors and Banks
If the bank continues to collect interest on loans that have gone bad, this action can be considered an Unlawful Act (PMH) as stipulated in Article 1365 of the Civil Code, which states that:
“Every act that is unlawful and brings harm to another, obliges the person who through his fault causes the harm, to compensate for the harm.”
The debtor in this case has the right:
– File a lawsuit to cancel the interest bill,
– Claim compensation for the losses incurred,
– File an objection to the bill or execution process.
Conclusion
If your credit has been categorized as NPL, then the bank is no longer authorized to add interest charges to your loan. There are strong legal grounds to reject the interest charges. Know and understand your rights to avoid falling victim to unfair banking practices.
Legal Basis
Financial Services Authority Regulation Number 40/POJK.03/2019 concerning Asset Quality Assessment of Commercial Banks
Article 1365 of the Civil Code
Authors:
Renaldi Avri Angga, S.H.
Yuliana Munthe
Editor:
Muhammad Arief Ramadhan, S.H.