Bank Uncertainty Regarding Inventory Collateral in Indonesian MSMEs Loans

Authors

DOI:

https://doi.org/10.18523/kmlpj320070.2024-10.151-169

Keywords:

Bank, Credit, MSME, Inventory, Risk, Default

Abstract

Purpose: An obligation in providing easy access to funding for MSMEs creates a dilemma for banks when the collateral is in the form of inventory objects. When MSMEs provide collateral in the form of inventory objects, it can cause uncertainty for banks as collateral recipients. This research examines legal protection efforts for banks when MSME credit guarantees are in the form of inventory objects. Methodology: The research method is normative juridical with analytical descriptive research, statute, conceptual, and case approaches. Results: The results showed that the existence of a norm in Law 42/1999, which allows fiduciary providers to sell inventories to third parties, results in legal uncertainty and risks to the bank's position as a preferred creditor. The fiduciary giver does not exchange inventory items that have been sold or traded but at a lower value. It is very detrimental to the bank if it is accompanied by an event of default from the debtor. The bank cannot sell the collateral object considering that the fiduciary giver has transferred the collateral object. Conclusion: Therefore, efforts are needed that can be made by banks to minimize these risks by asking for a personal guarantee (borg) as support for MSME credit.

Author Biographies

Trisadini Prasastinah Usanti, Universitas Airlangga Surabaya

Faculty of Law, Universitas Airlangga Surabaya, Indonesia

Sulani Sulani, Universitas Airlangga Surabaya

Faculty of Law, Universitas Airlangga Surabaya, Indonesia

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Published

2024-12-30

How to Cite

Prasastinah Usanti, T., & Sulani, S. (2024). Bank Uncertainty Regarding Inventory Collateral in Indonesian MSMEs Loans. Kyiv-Mohyla Law and Politics Journal, (10), 151–169. https://doi.org/10.18523/kmlpj320070.2024-10.151-169

Issue

No. 10 (2024): Kyiv-Mohyla Law & Politics Journal

Section

Reflections

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Copyright (c) 2024 Trisadini Prasastinah Usanti, Sulani Sulani

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