Can Foreigners Become Bank Debtors in Indonesia?

PERTANYAAN

1. Can foreigners become debtors at banks in Indonesia?
2. Can an Indonesian Citizen who is married to a foreigner (the marriage was conducted abroad and has not been registered in the Civil Registry) become a debtor in a bank in Indonesia?

INTISARI JAWABAN

Basically, according to PBI 24/7/2022, banks are prohibited from providing overdrafts as well as credit and/or financing in rupiah or foreign currencies to non-residents.

However, there are exceptions to this prohibition. What is the legal basis?

Please read the review below for a further explanation.

ULASAN LENGKAP

This article is an English translation of Bolehkah WNA Menjadi Debitur Bank di Indonesia?, written by Dian Dwi Jayanti, S.H., and was published on Monday, 15 May 2023.

This article below is an update of the article entitled Can Foreigners Become Bank Debtors in Indonesia? (Apakah WNA Boleh Menjadi Debitur Bank di Indonesia?) written by Dr. Flora Dianti, S.H., M.H. from DPC AAI Jakarta Pusat, and published on Friday, 29 July 2011.

All legal information available on Klinik hukumonline.com has been prepared for educational purposes only and is general in nature (read the complete Disclaimer). In order to obtain legal advice specific to your case, please consult with Justika Partner Consultant.

Definition of Creditors and Debtors

Before answering your question, we should first understand what is meant by credit, namely the provision of money or bills equivalent to that, based on loan approval or agreement between the Bank and another party, which requires the lender to settle its debt after a certain period of time with the provision of interest.[1] In other words, credit is a money lending and borrowing agreement between a bank as a creditor (kreditur in Bahasa Indonesia) and a customer as a debtor (debitur in Bahasa Indonesia). In the agreement, the bank as a lender believes that its customers within the agreed period of time, credits will be returned or paid in full.[2]

As with the above understanding, it is necessary to know that in this case the bank is the lender or creditor, and the debtor is the party obliged to pay off the debt if the debt is due or time and collectible.[3]

Regulation on Lending to Non-Residents

Furthermore, according to Article 17 section (1) PBI 24/7/2022, banks are prohibited from conducting transactions:

1. transfers of rupiah abroad;
2. non-deliverable forward transactions of foreign currencies against rupiah abroad;
3. provide overdrafts as well as credit and/or financing for foreign exchange transactions against the rupiah;
4. provide overdrafts as well as credit and/or financing in rupiah or foreign currencies to Non-Residents;
5. purchase securities in rupiahs issued by Non-Residents;
6. invest in rupiah to Non-Residents; and
7. other transactions as determined by Bank Indonesia.

Non-Residents are individuals, legal entities, or other entities, which are not domiciled in Indonesia or plan to domiciled in Indonesia for less than 1 (one) year, including the representatives and diplomatic staffs of other countries in Indonesia.[4]

Bank that violates the provisions shall be subject to administrative sanctions according to Article 17 section (3) PBI 24/7/2022 in the form of:

1. written reprimand; and
2. obligation to pay 1% (one percent) from the nominal value of the violated transaction for each violation, for a minimum of Rp. 10,000,000.00 (ten million rupiahs) and a maximum of Rp. 1,000,000,000.00 (one billion rupiah).

However, there are also exceptions to the aforementioned prohibition on lending including:[5]

1. certain activities for the transaction settlement using local currency (local currency settlement);
2. intraday overdrafts for foreign exchange transactions against the rupiah;
3. granting of credit or financing to Non-Residents with the requirements of certain economic activities in Indonesia;
4. purchase of securities relating to certain economic activities in Indonesia; and
5. other transactions as determined by Bank Indonesia,

In relation to certain economic activities in Indonesia, Bank Indonesia shall provide incentives for Banks that provide funds for certain and inclusive economic activities.[6] In connection with efforts to encourage economic growth for national economic recovery, Bank Indonesia needs to strengthen its policies. However, as there are both global and domestic challenges to Indonesia's economic recovery, support from the authorities is needed to maintain conducive economic conditions. Therefore, increased provision of funds for certain and inclusive economic activities is required. In this regard, Bank Indonesia implements policies in the form of incentives for banks that channel credit or financing to priority sectors, achieve the Macroprudential Inclusive Financing Ratio (Rasio Pembiayaan Inklusif Makroprudensial/ "RPIM"), and/or other financing determined by the bank.[7]

The provision of funds by banks for certain and inclusive economic activities shall consist of:[8]

1. the granting of Credit or Financing to priority sectors;
2. achievement of RPIM; and/or
3. other financing determined by Bank Indonesia

Further provisions on the granting of incentives shall be regulated under a Regulation of the Members of the Board of Governor.[9]

Furthermore, to answer your question regarding whether a foreign citizen married to an Indonesian Citizen can become a debtor at a bank in Indonesia, basically, according to Article 35 section (1) Marriage Law, properties acquired during marriage shall become marital property. However, in our opinion, once the marriage is registered in Indonesia and if there is no prenuptial agreement, there is a union of property, which is called joint property or marital property. Therefore, the credit to be received by the Indonesian spouse should be considered as joint property which is also the right of the foreign spouse.

Also read: Prenuptial Agreement, Terms and How to Make It

These are the answers we can provide, we hope you will find them useful.

Legal Basis:

1. Law Number 1 of 1974 on Marriage as amended by Law Number 16 of 2019 on the Amendment to Law Number 1 of 1974 on Marriage;
2. Regulation of Bank Indonesia Number 24/5/PBI/2022 of 2022 on Incentives for Banks that Provide Funding for Certain and Inclusive Economic Activities;
3. Regulation of Bank Indonesia Number 24/7/PBI/2022 of 2022 on Transactions in the Foreign Exchange Market.

Reference:

1. Ishak. Upaya Hukum Debitor Terhadap Putusan Pailit. Kanun Jurnal Ilmu Hukum, No. 65, Vol. 17, 2015;
2. Sri Redjeki Slamet. Perlindungan Hukum dan Kedudukan Kreditor Separatis dalam Hal Terjadi Kepailitan Terhadap Debitor. Lex Jurnalica, Vol. 13, No. 2, 2016.

---

[1] Elucidation of Article 17 section (1) letter c Regulation of Bank Indonesia Number 24/7/PBI/2022 of 2022 on Transactions in the Foreign Exchange Market (“PBI 24/7/2022”).

[2] Sri Redjeki Slamet. Perlindungan Hukum dan Kedudukan Kreditor Separatis dalam Hal Terjadi Kepailitan Terhadap Debitor. Lex Jurnalica, Vol. 13, No. 2, 2016, p. 106.

[3] Ishak. Upaya Hukum Debitor Terhadap Putusan Pailit. Kanun Jurnal Ilmu Hukum, No. 65, Vol. 17, 2015, p. 190.

[4] Article 1 number 3 PBI 24/7/2022.

[5] Article 17 section (2) PBI 24/7/2022.

[6] Article 2 section (1) Regulation of Bank Indonesia Number 24/5/PBI/2022 of 2022 on Incentives for Banks that Provide Funding for Certain and Inclusive Economic Activities (“PBI 24/5/2022”).

[7] General Elucidation of PBI 24/5/2022.

[8] Article 2 section (2) PBI 24/5/2022.

[9] Article 2 section (5) PBI 24/5/2022.