Jakarta, en.SERU.co.id – Indonesia’s Financial Services Authority (OJK) has stressed the importance of legal certainty for the banking sector by applying the Business Judgement Rule in dealing with non-performing loans (NPLs). The regulator believes legal protection is essential so banks can continue lending professionally while upholding prudence.
OJK, law enforcement authorities, and academics agree that credit defaults resulting from genuine business failures should not automatically lead to criminal charges.
Dian Ediana Rae, OJK’s Chief Executive for Banking Supervision, explained that the Business Judgement Rule essentially provides legal protection to bank executives for business decisions made in good faith, based on the principle of prudence, free from conflicts of interest, and aimed at the company’s best interests.
“Legal certainty is crucial so the banking industry can continue performing its intermediation function and maintaining the integrity of the national financial sector,” Dian said, as quoted from the OJK website on Thursday (14/5/2026).
She added that strong corporate governance and strict supervision remain vital to ensure this legal protection is not misused to cover fraud or irregularities.
Harmonized Understanding Among Stakeholders
Dian highlighted the need to build a shared understanding among regulators, law enforcement officials, academics, and banking practitioners regarding the application of the Business Judgement Rule.
“Alignment of perspectives is necessary so professional bankers are not subjected to excessive pressure when facing business risks that are a normal part of banking activities,” she said.
Supreme Court Justice Jupriyadi from the Criminal Chamber affirmed that non-performing loans are not automatically considered criminal acts.
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He referred to Article 97 paragraph (5) of Law No. 40 of 2007 on Limited Liability Companies, outlining key requirements for the protection to apply: decisions must be made in good faith, follow proper procedures, be free from conflicts of interest, and include maximum efforts to mitigate losses.
“If all these elements are fulfilled, the case should not be treated as a criminal offense, even if the loan becomes problematic due to external factors beyond the bank’s control,” Jupriyadi said. He emphasized that criminal law should be used only as a last resort in resolving banking issues.
Protection Revoked in Cases of Manipulation
Secretary of the Attorney General’s Office for Special Crimes, Didik Farkhan Alisyahdi, described the Business Judgement Rule as an anti-criminalization instrument for bank officials.
“Bank executives can still receive legal protection even when non-performing loans cause financial losses. However, this protection does not apply if there is evidence of manipulation, collusion, deviation from purpose, disregard for prudential principles, or provision of false information,” he explained.
In such cases, the resulting losses are no longer viewed as normal business risks but as consequences of criminal acts.
With this alignment of perceptions, bankers are expected to make business decisions without fear. For the wider public, this could translate into more open access to credit, especially for businesses, MSMEs, farmers, and communities in need of financing.
OJK noted that not all bad loans stem from corruption or crime; many result from business failures influenced by economic conditions and other external factors. With this legal protection in place, banks are hoped to remain courageous in performing their financing role to support national economic growth. (aan/mzm)
