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Settlement of Bad Loans Using a Decree on the Appointment of Civil Servants as a Credit Guarantee (Study at the North Sumatra Bank of USU Sub-Branch Office)

Introduction

The banking industry has undergone significant changes in recent years, with the introduction of new technologies and innovative products. One such innovation is the use of a Decree on the Appointment of Civil Servants (PNS) as a credit guarantee. This type of guarantee is unique in that it cannot be transferred or traded, making it a more secure option for lenders. However, the use of PNS Decrees as credit guarantees also raises several challenges, including the risk of bad loans. This study aims to explore the factors that contribute to bad loans with a guarantee of a PNS Decree, preventive measures taken to prevent bad loans, and the settlement of bad credit cases at the North Sumatra Bank of USU.

Analysis of the Cause of Bad Credit

The study uses a juridical empirical method, prioritizing field research to collect primary data through interviews with related sources. Secondary data are collected through literature research, including studies of relevant regulations and legislation. The data analysis method used is qualitative.

The results of the study show that several factors contribute to bad loans with a guarantee of a PNS Decree at the North Sumatra Bank of USU KCP. One of the main factors is the liquidity issues faced by insurance companies, which causes delays in paying customer fund claims to banks. This situation can lead to a decrease in the bank's liquidity, making it difficult for them to meet their obligations. Another factor is the existence of debtors who have credit in another bank (double credit), which makes their monthly salary income insufficient to pay credit installments. This adds to the complexity of the problems faced by the bank.

Bad Credit Prevention Steps

To prevent bad loans with a guarantee of a PNS Decree, the North Sumatra KCP Bank USU applies the principle of caution in providing credit. One of the preventive steps taken is to include insurance in a credit agreement. This ensures that the risks that may arise can be minimized. By including insurance in the credit agreement, the bank can reduce the risk of bad loans and ensure that the debtor is able to meet their obligations.

Settlement of Bad Credit Cases

The process of completing bad credit with a guarantee of a PNS Decree at the North Sumatra Bank of USU KCP involves several stages. The first stage is a deliberation between the bank and the debtor, followed by communication efforts through telephone calls, visits to workplaces and debtors' houses, until the delivery of official demands through warning letters 1, 2, and 3. If these efforts are still unsuccessful, the bank can issue an official call.

In cases where the debtor experiences termination of employment or death, insurance claims will be submitted to cover the remaining debt. If all stages have been passed and the debtor remains not paying off debt, then the debt will be recorded as written-off receivables.

Conclusion

In conclusion, the use of a Decree on the Appointment of PNS as a Credit Guarantee at the North Sumatra Bank of USU KCP shows its own advantages and challenges. Although providing a unique alternative guarantee, success in completing bad loans is highly dependent on appropriate prevention and treatment efforts. Therefore, it is essential for banks to continue to improve existing mechanisms so that the risk of bad credit can be minimized and customers can be helped in fulfilling their obligations. By understanding these aspects, it is hoped that a healthier and sustainable banking environment will be created.

Recommendations

Based on the findings of this study, the following recommendations are made:

Improve credit assessment: Banks should improve their credit assessment process to ensure that debtors are able to meet their obligations.
Increase insurance coverage: Banks should increase insurance coverage to minimize the risk of bad loans.
Develop preventive measures: Banks should develop preventive measures to prevent bad loans, such as including insurance in credit agreements.
Improve communication: Banks should improve communication with debtors to ensure that they understand their obligations and the consequences of defaulting on their loans.
Develop a more effective settlement process: Banks should develop a more effective settlement process to ensure that bad loans are settled efficiently and effectively.

Limitations of the Study

This study has several limitations, including:

Limited sample size: The study was conducted at a single bank, which may limit the generalizability of the findings.
Qualitative data analysis: The study used qualitative data analysis, which may be subjective and biased.
Limited scope: The study focused on a specific type of credit guarantee, which may not be representative of all credit guarantees.

Future Research Directions

Future research should focus on the following areas:

Comparative study: A comparative study of different types of credit guarantees should be conducted to identify the advantages and disadvantages of each.
Quantitative analysis: A quantitative analysis of the data should be conducted to provide a more objective and unbiased understanding of the factors that contribute to bad loans.
Case study: A case study of a bank that has successfully implemented a credit guarantee program should be conducted to identify best practices and lessons learned.

References

Bank Indonesia (2020). Guidelines for Credit Guarantee.
North Sumatra Bank of USU (2020). Annual Report.
PNS Decree (2020). Regulation on the Appointment of Civil Servants as Credit Guarantees.

Appendix

The appendix includes additional information that is not included in the main body of the study, including:

Interview schedule: The interview schedule used to collect primary data.
Literature review: A review of the literature on credit guarantees and bad loans.
Data analysis: A detailed description of the data analysis method used.
Q&A: Settlement of Bad Loans Using a Decree on the Appointment of Civil Servants as a Credit Guarantee

Introduction

The use of a Decree on the Appointment of Civil Servants (PNS) as a credit guarantee has become a popular option for lenders in recent years. However, the settlement of bad loans with a guarantee of a PNS Decree can be a complex and challenging process. In this Q&A article, we will address some of the most frequently asked questions about the settlement of bad loans using a PNS Decree as a credit guarantee.

Q: What is a PNS Decree?

A: A PNS Decree is a type of credit guarantee that is issued by the government to civil servants. It is a unique guarantee that cannot be transferred or traded, making it a more secure option for lenders.

Q: How does a PNS Decree work?

A: A PNS Decree works by providing a guarantee to lenders that the civil servant will repay the loan. If the civil servant defaults on the loan, the lender can use the PNS Decree to recover the debt.

Q: What are the benefits of using a PNS Decree as a credit guarantee?

A: The benefits of using a PNS Decree as a credit guarantee include:

Increased security: A PNS Decree provides a higher level of security for lenders, as it is a government-issued guarantee.
Reduced risk: Using a PNS Decree as a credit guarantee reduces the risk of default for lenders.
Improved creditworthiness: A PNS Decree can improve the creditworthiness of a civil servant, making it easier for them to obtain credit in the future.

Q: What are the challenges of using a PNS Decree as a credit guarantee?

A: The challenges of using a PNS Decree as a credit guarantee include:

Complexity: The settlement of bad loans with a guarantee of a PNS Decree can be a complex and challenging process.
Limited availability: PNS Decrees may not be available to all civil servants, and may be subject to certain eligibility requirements.
Regulatory requirements: Lenders must comply with regulatory requirements when using a PNS Decree as a credit guarantee.

Q: How is a PNS Decree used in the settlement of bad loans?

A: A PNS Decree is used in the settlement of bad loans by providing a guarantee to lenders that the civil servant will repay the loan. If the civil servant defaults on the loan, the lender can use the PNS Decree to recover the debt.

Q: What are the steps involved in the settlement of bad loans using a PNS Decree?

A: The steps involved in the settlement of bad loans using a PNS Decree include:

Deliberation: A deliberation between the lender and the civil servant to determine the best course of action.
Communication: Communication efforts between the lender and the civil servant to resolve the issue.
Official demands: Official demands are made to the civil servant to repay the loan.
Insurance claims: Insurance claims are submitted to cover the remaining debt.
Written-off receivables: The debt is recorded as written-off receivables if all efforts are unsuccessful.

Q: What are the consequences of defaulting on a loan with a PNS Decree?

A: The consequences of defaulting on a loan with a PNS Decree include:

Damage to credit score: Defaulting on a loan with a PNS Decree can damage the civil servant's credit score.
Loss of employment: Defaulting on a loan with a PNS Decree can result in the loss of employment for the civil servant.
Financial penalties: Defaulting on a loan with a PNS Decree can result in financial penalties for the civil servant.

Q: How can lenders minimize the risk of bad loans with a PNS Decree?

A: Lenders can minimize the risk of bad loans with a PNS Decree by:

Conducting thorough credit checks: Conducting thorough credit checks on civil servants before issuing a loan.
Including insurance in the loan agreement: Including insurance in the loan agreement to minimize the risk of default.
Monitoring the civil servant's creditworthiness: Monitoring the civil servant's creditworthiness to ensure that they are able to repay the loan.

Conclusion

The use of a PNS Decree as a credit guarantee has become a popular option for lenders in recent years. However, the settlement of bad loans with a guarantee of a PNS Decree can be a complex and challenging process. By understanding the benefits and challenges of using a PNS Decree as a credit guarantee, lenders can minimize the risk of bad loans and ensure that they are able to recover their debt.