By Eko B. Supriyanto, Editor-in-Chief of Infobank Media Group
We are witnessing a paradox that is both absurd and heartbreaking in today’s political-economic landscape. On the one hand, the country needs a healthy banking sector, smooth financial intermediation, and bankers who are willing to take business risks to drive the real economy. On the other hand, we are plunging these credit decision-makers into existential fear through a wave of disproportionate criminalization. If this continues, we are not building a banking system, but rather erecting a monument to fear.
The prevailing public narrative, especially among the general public, is extremely simplistic and dangerous: “Bankers earn huge salaries, are wealthy—so why are they still corrupt? They deserve to be punished.” This is a simplification born of unenlightened social envy, and unfortunately, amplified by law enforcement agencies that disregard the logic of business.
Honestly. The banking community and all of us need to correct this perspective with a cool head, just as we manage a rational rule-of-law state.
It would be wise for us to take a step back and use a very basic analogy. A bank, in essence, is a merchant. It is no different from an orange seller at the market. A merchant buys oranges from farmers and then resells them. In that process, he faces risks: some oranges are rotten, some are sour, and some don’t sell. The risk of damaged goods is inherent in trade. No police officer or prosecutor has ever arrested an orange vendor simply because one or two kilograms of their stock went bad. Instead, they cut their losses, discard the rotten goods, and continue their business.
Why does this simple logic break down when applied to banks? Bad loans, or non-performing loans (NPLs), are the “rotten oranges” of the banking business. As long as credit decisions are made in accordance with procedures, there is no conflict of interest, and there is no malicious intent, then credit losses are purely business risks, not criminal acts. We cannot indict a banker simply because the economy is slowing down, the market is crashing, or the debtor is experiencing force majeure. That is systemic risk, not mens rea.
As a senior banker has often pointed out to Infobank, why are performing loans—which have long contributed significantly to bank profits and dividends—never described as benefiting the state?
This is where the most glaring economic and political injustice lies. Law enforcement officials, armed with an overly expansive doctrine of state losses, see only one side of the balance sheet. When state-owned bank loans go bad, they shout: “State funds are gone! Arrest the bankers! Prosecute the bankers!”
This logic is fundamentally flawed. When loans are performing well, generating interest, and yielding trillions of rupiah in profits that are then deposited into the state treasury as dividends, no police, prosecutors, or investigators from the Corruption Eradication Commission (KPK) ever show up with a bouquet of flowers and say: “This is a benefit to the state; give the bankers an award.”
This is where the essence of criminalization begins. There is an asymmetry in treatment regarding business realities. The state treats itself as an entity immune to risk. In reality, as the owner of state-owned banks, the state is an entrepreneur that must also bear the potential for loss. By criminalizing every business decision that goes awry, the state is betraying its own nature as a market participant. Banks are required to have good governance, yet the state allows governance outside the banking sector to be in disarray.
Also, banks grant loans when borrowers have good business prospects. But regulators only take notice once the loans have gone bad. That’s obviously a different story.
What is even more concerning is what will happen if this narrative is not immediately corrected by the relevant stakeholders—the Financial Services Authority (OJK), Bank Indonesia (BI), the Indonesian National Bank Association (Perbanas), the Association of State-Owned Banks (Himbara), the Association of Regional Development Banks (Asbanda), and the Indonesian Bankers Association (IBI)? Then what we’ll end up with is a culture of “risk-averse zombie bankers.” Lazy bankers. Bankers who prefer government bonds (SUN or SBN). Especially since President Prabowo hopes for a maximum loan interest rate of 5 percent. Yes, let the bankers flock to buy SBN or SUN with yields above 5 percent. Without the risk of criminalization for non-performing loans. It’s halal, too.
Bankers will stop extending credit to sectors with potential risks. Investment loans will go bad, working capital loans will be blocked. Small and medium-sized entrepreneurs will be the first victims, as they are deemed unbankable. Economic growth will slow not because of a lack of capital, but because our financial intermediation is held hostage by Articles 2 and 3 of the Anti-Corruption Law, which are applied rigidly and haphazardly.
In corporate law, the business judgment rule (Eisenberg, 1993) protects decision-makers who act in good faith, with adequate information, and without conflicts of interest—rational business failures are not criminal offenses. In banking, the theory of intermediation (Freixas & Rochet, 2008) states that non-performing loans (NPLs) are an expected risk, not an anomaly. If NPLs are criminalized, a chilling effect arises: banks become defensive, intermediation weakens, and economic growth is hindered. Banks turn into “lazy banks,” afraid of the risk of criminalization. Stiglitz (1981) asserts that the credit market is suboptimal if risks cannot be taken rationally.
This is no longer a legal issue; it is a matter of Indonesia’s economic future. We are killing the “animal spirits”—the vitality of entrepreneurship—both at the debtor level and at the banker level.
Infobank urges that it is time for all stakeholders in the banking industry to step out of their shells. Do not just complain at closed-door seminars or in discussion groups among fellow bankers. The public must be educated in plain language: business risk is not a crime, and prudence does not mean zero risk.
