By Eko B. Supriyanto, Editor-in-Chief of Infobank Media Group
The POLITICAL ECONOMY of Indonesia’s banking sector is ailing. Seriously. The symptoms are no longer limited to slowing credit growth or tight liquidity. The symptoms are now spreading to the very lifeblood of the financial intermediation system: frightened bankers and credit analysts, scrambling to transfer departments, preferring to resign rather than risk their futures behind bars.
The cause is simple, yet absurd. It is not a monetary crisis, not global turmoil, nor overly tight monetary policy. The cause is a specter deliberately created by law enforcement itself: the baseless criminalization of non-performing loans.
Let’s be honest. In Indonesia today, non-performing loans are like a contagious disease. It’s not the disease that’s scary, but the “cure.” A banker extends a loan. The business was healthy at the time. The prospects were excellent. The analysis was conducted according to proper procedures. Suddenly, the economy slumps, there’s a forest fire, or a pandemic—the loan goes bad. Then, BAM! He’s summoned by the prosecutor’s office. Detained. Put on trial.
This is what we call over-criminalization. Excessive criminalization
In criminal law, there is one key term that law enforcement officials often overlook: mens rea—criminal intent.
From a banking perspective, non-performing loans are a logical consequence of economic uncertainty. They are an inherent risk. But now, non-performing loans are being treated as corruption. Yet where is the evidence of funds flowing into private pockets? Where is the evidence of collusion with borrowers? Where is the evidence of malicious intent? There is none. What exists is merely business failure. And business failure is not a crime.
This is not law enforcement. This is mass psychological terror against bankers.
In sound banking practice, non-performing loans are an inherent part of the risks of the banking business. This risk is already accounted for through the implementation of risk management and prudential supervision, and must be resolved through civil and administrative legal mechanisms, not criminal ones. Criminal law is the ultimum remedium—the last resort. This remedy should only be used if there is an element of intent (mens rea), such as document forgery, collusion, or embezzlement.
However, the opposite is happening in this country. Criminal law has become the primum remedium—the first remedy injected as soon as a credit problem arises. A loan granted 12 years ago can even become a “ghost charge” for a credit analyst performing their duties in good faith.
The Sritex Case: A Haunting Precedent
The case of PT Sri Rejeki Isman Tbk (Sritex) is the clearest example of this madness. The directors of three Regional Development Banks (Bank DKI, Bank Jateng, and Bank BJB) were accused of causing losses to the state due to problematic loans extended to Sritex. Those bankers granted the loans based on favorable figures from a Public Accounting Firm. The loans were creditworthy. Sritex’s financial statements appeared sound and healthy. So, what was the bankers’ mistake? None. There was no mens rea, no malicious intent.
The State Audit Agency (BPK) has also emphasized: not all non-performing loans result in state losses or criminal charges. Problem loans only have the potential to enter the realm of criminal law if certain elements are present, such as abuse of authority, the business judgment rule not being applied, the existence of conflicts of interest, and the fulfillment of conditions indicating serious misconduct.
So, why were those BPD bankers still prosecuted? Because in our legal enforcement practices, the line between the business judgment rule and criminal acts is blurred. There is no certainty. And it is in this vacuum of certainty that fear thrives.
It’s not just BPD bankers. Recently, eight bankers from BRI have also been criminalized. Their situation is even more tragic because the loans they issued over a 14-year period went into default due to business risks, such as fires and floods. Even more alarming is that several directors of regional banks have already been asked to provide lists of non-performing loans. This is truly terrifying. If a loan has already gone bad, it’s easy to find evidence. If no evidence is found, the charges used are negligence and benefiting a third party.
It’s not because they’re guilty. It’s not because they accepted bribes or engaged in collusion. They’re afraid because our criminal justice system offers no certainty. In fact, a retired banker never knows whether a loan he approved years ago will become problematic five years down the line. And if it does go bad, will he be thrown in jail?
So the only option is to ask the debtor—who may also be struggling—to pay off the loan early. An action that is irrational from a business perspective, but psychologically understandable: they are buying peace of mind at a sky-high price.
This is a massive human tragedy. And it has absolutely nothing to do with fair law enforcement.
From a political economy perspective, the criminalization of non-performing loans creates three serious distortions.
First, distortions in credit allocation. Bankers and credit analysts, fearing criminal prosecution, will tend to avoid high-risk but productive sectors, such as MSMEs, agriculture, fisheries, and downstream industries. They will prefer to channel credit to safer sectors—consumer spending, luxury real estate, or large, well-established corporations. As a result, funds do not flow to where they are most needed to create jobs and generate value.
Second, distortions in professional behavior. Many credit analysts have requested transfers to operational or compliance units—roles that do not directly involve the risks of credit decision-making. Worse still, many are choosing to resign and move to other professions outside the banking sector. This constitutes a brain drain from the heart of banking intermediation. If the best professionals leave the credit analysis profession, who will carefully assess borrowers’ creditworthiness?
Third, distortions in macroeconomic policy. The government has injected fresh funds of Rp200 trillion into Himbara banks to stimulate growth, but the effect has been negligible because the credit has not been disbursed. This is a contradictory policy: on one hand, the government is encouraging credit expansion; on the other, law enforcement is pursuing bankers with non-performing loans—regardless of whether criminal elements are involved. Such cross-purpose policies will only squander public funds without yielding results.
Restore Criminal Law to Its True Function
No one opposes the enforcement of the law against fictitious loans, document manipulation, or collusion between banks and borrowers. Such practices must indeed be dealt with firmly. However, criminal law should not be the automatic response every time a loan goes bad.
The Supreme Court has provided guidance worth noting. In a rehearing decision regarding a troubled loan case at a state-owned bank in Medan, the Supreme Court overturned the criminal conviction on the grounds that the prosecutor failed to convincingly prove the element of abuse of authority. The panel of judges held that the loan was granted through formal procedures, and the debtor’s business failure—no matter how severe its impact—does not automatically constitute a criminal offense.
This principle must serve as a guiding principle. What should be punished is not business failure, but rather deviations in the decision-making process and the occurrence of fraud.
Judges, Please Use Common Sense
So it is not wrong to have a message for the judges in this country. When a banker extends a loan, he exercises business judgment. He assesses the business prospects. He analyzes the borrower’s ability to pay. He requires collateral. He has done his job. If the borrower’s business subsequently goes bankrupt due to external factors—not because of the borrower’s deception or the banker’s negligence—then that is not a criminal offense.
This is already recognized under the Business Judgment Rule (BJR). Under Article 97(2) of the Limited Liability Companies Act, directors cannot be held personally liable for the company’s losses if they acted in good faith and with due care. The Financial Services Authority (OJK) itself has emphasized that as long as there is no fraud in the credit granting process, non-performing loans must be viewed as a business risk in the civil domain. In fact, the State Audit Agency (BPK) has also stated that non-performing loans do not automatically constitute a criminal offense. It must first be proven whether the BJR applies or not. A loan only enters the criminal domain if there is an abuse of authority, the BJR does not apply, or there is a conflict of interest.
It would be advisable for judges to review Constitutional Court Decision No. 62/PUU-IX/2013. That decision recognizes the BJR principle as protection for SOE directors against the criminalization of business decisions.
Do not judge business failures. Judge only if there is fraud, embezzlement, or malicious intent.
Furthermore, all parties must address the Anti-Corruption Law. Until now, law enforcement officials have frequently used Article 2 or Article 3 of the Anti-Corruption Law to prosecute bankers involved in non-performing loans. However, both of these articles contain the elements of “acting unlawfully” and “enriching oneself or others.” If there is no flow of funds to the banker, if there is no evidence that he received a bribe, then how can he be accused of corruption? This is a reversal of logic.
Concerns about criminalization should not be interpreted as an attempt to relax law enforcement. Practices such as fictitious loans, document manipulation, or collusion between banks and borrowers must indeed be dealt with firmly. However, criminal law should not be the automatic response every time a loan goes bad.
Once again—what must be punished is not business failure, but deviations in the decision-making process. Without clear safeguards, almost no business decision is truly safe from criminal charges. Therefore, this BJR principle must be accommodated in a normal manner and must be limited. So that policymakers feel protected. Not reckless.
If this fear is allowed to persist, the banking sector’s intermediary function will be paralyzed. Credit will not flow to the real sector. The 8 percent economic growth target set by President Prabowo Subianto will remain a pipe dream. Vague provisions that benefit other parties—even in the absence of mens rea and the flow of funds—are still enforced by law enforcement officials.
Meanwhile, those who have ruined their professional careers through criminal charges walk around casually, calm, and without a shred of guilt—many of them have even been promoted. This is the law of the jungle, not the rule of law.
