ISSN: 0973-5089 | [email protected]

Settlement of Problem/Non-performing Loans through Non-Litigation Methods by Government Banks in Indonesia

Muhammad Yusni, Bismar Nasution, Tan Kamello, Suhaidi

Universitas Sumatera Utara, Medan, Indonesia

Abstract:

Financial institutions are regarded as the pillars of any nation's economic development and financial stability. However, the banking sectors all over the globe faced economic crises at different times due to multiple factors. The aim of the current study was to examine the banking crisis in the light of problematic/non-performing loans. It also aimed to investigate banks' credit systems, and the settlement of non-performing loans in the Indonesian context. Applying a normative juridical approach, which is mostly applied to process legal doctrines, legal principles, and legal rules in order to understand prevailing legal issues, primary and secondary data were assessed from various journals, books, research material, institutional reports, regulatory regulations, and digital media. The study discovered alternative ways to settle non-performing loans via litigation and non-litigation methods. It also found certain obstacles to applying arbitration and mortgage agreement rights to settle non-performing loans. The study strongly recommended alternative ways to deal with these issues.

Keyword:

Non-performing/Problem loans; Litigation and non-litigation Ways; Mortgage Agreements; Banking institutions