LEGAL ISSUES IN THE IMPLEMENTATION OF CREDIT RELAXATION POLICY IN THE BANKING SECTOR AS A COUNTER CYCLICAL IMPACT ON THE COVID-19 PANDEMIC

Abstract

The spread of coronavirus disease 2019 (Covid-19) has a direct or indirect impact on the financial capacity of debtors, including micro, small, and medium business debtors. This condition may disrupt banking performance, which can affect economic growth. Therefore, to encourage the optimization of the banking intermediation function, maintain financial system stability, and support economic growth, economic stimulus policies are needed as a countercyclical impact on the spread of Covid-19. OJK has issued several regulations to stimulate the banking sector. On 16 March 2020, the OJK issued OJK Regulation No.11/POJK.03/2020 concerning National Economic Stimulus as a Countercyclical Policy Impact of the Spread of Coronavirus Disease 2019 (POJK No.11/POJK.03/2020). There are some weaknesses with credit relaxation regulated in POJK No.11/POJK.03/2020. The legal question in this research is: What are appropriate legal solutions to overcome the weakness of credit relaxation regulated by POJK No.11/POJK.03/2020? This legal research employs a juridical normative method with secondary data. The secondary data consists of the applicable regulation, books, articles, and other sources.To solve the above-mentioned problems,the OJK might consider improving POJK No.11/POJK.03/2020 by providing further guidelines on the criteria of affected debtors and business sectors, and providing further guidelines onthe implementationofthecreditrelaxation. Besides that, the OJKS needs to increase its supervisory role in monitoring the granting process of thecredit relaxation and settle objections from debtors if their relaxation application is refused by the bank.