The Indonesia Financial Services Authority published remarks from its Chief Executive of Banking Supervision at a banking industry forum stating that healthy and sustainable credit growth should be accompanied by legal certainty for banks, including a shared understanding among regulators, law enforcement agencies, academics and the banking industry on how the business judgment rule applies in criminal cases involving non-performing loans. OJK presented the doctrine as legal protection for business decisions taken in good faith, with prudence, without conflicts of interest and in the company’s best interests, including in lending and financing decisions. At the forum, a judge of the Criminal Chamber of the Supreme Court said the rule can apply if the cumulative requirements in Article 97(5) of the Company Law are met, including good faith, proper procedures, absence of conflicts of interest and maximum efforts to mitigate loss risk. Losses that still arise after those conditions are met, including bad loans caused by external factors beyond a bank’s control, were described as business failure rather than a criminal act. A senior official from the Attorney General’s Office set out five elements for protection, adding that decisions must be based on sufficient and accurate information and remain within authority, while manipulation, collusion, false information, disregard of prudence or deviation from the original purpose would remove that protection. Speakers also called for uniform legal interpretation and for criminal enforcement to remain a last resort in banking cases that meet governance standards.
OJK 2026-05-13
Indonesia Financial Services Authority calls for common interpretation of the business judgment rule in bank bad loan cases
The Indonesia Financial Services Authority published remarks from its Chief Executive of Banking Supervision stressing that sustainable credit growth requires legal certainty for banks, including a shared understanding of how the business judgment rule applies in criminal cases involving non-performing loans. At a banking forum, Supreme Court and Attorney General’s Office representatives outlined conditions under which the rule protects lending decisions taken in good faith, with prudence, proper procedures and no conflicts of interest, and emphasized that compliant business failures should not be criminalized. Speakers also called for uniform legal interpretation and for criminal enforcement to remain a last resort.