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Jakarta Post

Constitutional Court ruling affects credit risk

  • Alexander Hutauruk

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Jakarta   /   Mon, February 10, 2020   /  03:14 pm
Constitutional Court ruling affects credit risk Lenders normally employ fiducia security to put encumbrance over assets so that when default occurs, the encumbered assets can be sold to satisfy the borrowers’ obligations. (Shutterstock/File)

The World Bank has indicated and inquired about fiducia in its 2020 annual survey of the ease of doing business in Indonesia. Because of its nature, which facilitates the nonpossessory security interest and out-of-court enforcement, the existence of fiducia has been instrumental in measuring and elevating the strength of the legal right index. But the narrative may no longer be the same because of what the Constitutional Court said with its recent decision dated Jan. 6 on fiducia law. The decision raised questions among some people. Lenders normally employ fiducia security to put encumbrance over assets so that when default occurs, the encumbered assets can be sold to satisfy the borrowers’ obligations. One of the chief attractions of fiducia is that lenders can enforce it, namely by selling the encumbered assets at auction or by private sale without involving court processes. ...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.