Don't Ignore Prudential Banking Coal Mining Funding, Bank Directors Can Be Criminally Charged

JAKARTA - The Indonesian banking industry is still not committed to implementing OJK Regulation (POJK) Number 51/POJK.03/2017 concerning the Implementation of Sustainable Finance. The reason is that there are still many financial institutions that disburse credit to coal dirty energy.

Responding to these conditions, Business Law Expert from Airlangga University Prof Budi Kagramanto said that banks should be selective in providing funding or loans, especially to mining industry companies with all the potential for environmental damage caused.

Selective is meant to pay attention to the principle of prudence or prudential banking in the Banking Law, which then contains the 5C aspects, namely Character, Capacity, Capital, Collateral, and Condition of Economy. Economy).

"Even if the precautionary principle is complied with, banks must also look at the long-term impact. So they must be selective, so as not to collide with government policies related to the environment," said Prof. Budi in Jakarta, Thursday, May 12.

If forced to finance, he continued, lending funds must also be with collateral commensurate with loans from state-owned banks. If there is no collateral, Prof Budi sees it as a big problem.

"If there is a provision of financing without collateral, especially to the mining industry, it has the potential to violate the law, especially the Banking and Corruption Law, in the 5C aspects, especially Collateral (collateral)," he said.

For him, collateral is an obligation, especially since the debtor is a mining company with all the risks of environmental damage caused.

"Yes, you can't do that. Especially for funding large projects in the mining industry. You still have to use collateral. I don't think you can, because this involves environmental damage. Don't let liquid funds without collateral be approved just like that," said Prof. Budi.

As previously reported, the Special Staff of the Minister of Energy and Mineral Resources (ESDM) for Mineral and Coal Governance, Irwandy Arif. He mentioned that as many as six Indonesian banks were busy providing funding for the coal industry, even reaching Rp 89 trillion. The banks are BNI, Mandiri, BRI and BCA. The disbursement of funds to finance coal mining companies mostly occurs in South Sumatra to Kalimantan.

Meanwhile, Professor of the Faculty of Law, Universitas Padjadjaran, Prof. Gde Pantja Astawa, also commented on the alleged unsecured funding from state-owned banks to a number of mining companies.

According to him, if it is true that there is an alleged violation in the funding of this mining company, referring to the Banking Law, then the BPK will certainly submit its report to the public. "It's impossible to get away with it. This will be a finding, at least it's questionable, how can it be passed away? Moreover, without collateral, this will raise suspicions," said Prof. Gde Pantja to reporters Wednesday, May 11, 2022.

Then he also highlighted the performance of OJK as an institution authorized to oversee the financial sector, including banking. If there are such findings, surely this authority will not remain silent, especially when it comes to prudential banking principles.

He explained that in the operations of the company, the bank, apart from referring to the Banking Law, also adheres to the Limited Liability Company (PT) Law. Its management is based on the principle of the Business Judgment Rule. From that, the bank will calculate the company's losses, including in mining financing, although what must be prioritized is the principle of prudential banking.

He also reminded the board of directors of the bank, which he believed must be people with qualified abilities, to consider all forms of risk in financing, especially regarding profit and loss.

"You have to be careful and stick to the business judgment rule, because if there is a fraud without good faith, then the threat is criminal," he said.