Reduce NPL and NPF : Secure Fiduciary Objects

• Admin
• News and Insights
• August 27, 2025

REDUCE NPL AND NPF : SECURE FIDUCIARY OBJECTS

The cause of losses incurred by banks and financing institutions/finance companies as creditors receiving fiduciary guarantees is the default on loan payments by debtors or fiduciary providers. In banking, this is referred to as Non-Performing Loans (NPL), and in finance, it is referred to as Non-Performing Finance (NPF).

These losses are exacerbated by fiduciary collateral (“fiduciary objects”) that are no longer in the possession of the debtor. This may be due to destruction, theft, embezzlement, or transfer by the debtor without the creditor’s consent. As a result, the fiduciary collateral cannot be executed to settle or reduce the debtor’s obligations. What legal steps and strategies can creditors take to secure the fiduciary collateral?

Legal Steps & Strategies to Secure Fiduciary Objects

To secure fiduciary collateral objects, one must understand the definition and laws governing fiduciary.

Article 1 Number 1 of Law Number 42 of 1999 concerning Fiduciary Guarantees (“JF Law”) defines Fiduciary as the transfer of ownership rights of an object based on trust with the provision that the object whose ownership rights are transferred remains in the possession of the owner of the object. Furthermore, understand the obligations and prohibitions for debtors. The debtor’s obligation is to surrender the object of the fiduciary guarantee in the event of execution (see Article 30 of the FG Law).

The prohibition for the debtor is the prohibition of falsifying, altering, removing, or in any way providing misleading information with the aim of creating a fiduciary agreement (see Article 35 of the FG Law). The next prohibition is to transfer, pledge, or lease fiduciary objects without the creditor’s consent (see Article 36 of the Fiduciary Law).

After understanding the obligations and prohibitions for debtors, creditors can secure fiduciary collateral objects preventively or repressively.

To take preventive measures, creditors can do the following:

1. 1. 1. Ensure that the fiduciary object meets the requirements and is registered;
      2. Insure the fiduciary object (see Article 10 of the Fiduciary Law) to minimize losses in the event of loss or damage;
      3. Conduct monitoring and periodic visits to check the condition and location of the collateral;
      4. Educate the debtor about the debtor’s obligations and prohibitions regarding the object.

Meanwhile, regarding the security of fiduciary objects in the context of execution, the following applies:

1. 1. 1. If the object is stolen, the debtor is instructed to report the theft to the police and file a claim with the insurance company;
      2. If the fiduciary object is embezzled and not covered by insurance, the creditor may encourage the debtor to report the alleged crime of embezzlement to the police;
      3. If the object is transferred or leased without permission, the creditor can report the debtor for alleged criminal acts as stipulated in Article 36 of the JF Law;
      4. By approaching the party that controls the fiduciary guarantee;
      5. Filing a civil lawsuit with a claim for damages.

Conclusion

Fiduciary creditors may secure fiduciary objects preventively or preemptively and repressively for handling. Even if the fiduciary collateral is controlled by another party, the creditor still has the right to execute it.

Legal Basis

Law Number 42 of 1999 concerning Fiduciary Collateral

Author:

Renaldi Avri Angga, S.H.

Yuliana Munthe

Editor:

Muhammad Arief Ramadhan, S.H.