<![CDATA[Bank lending is a core banking function that supports economic activity and establishes a legal relationship between the bank as creditor and the customer as debtor. This relationship is formalized in a credit agreement governing the loan amount, interest, term, repayment, collateral, and the parties’ respective rights and obligations. This study examines the validity of agreements under Article 1320 of the Indonesian Civil Code, their binding force and good-faith performance under Article 1338, the application of prudential principles through the 5C analysis, the legal position of collateral, and the consequences of default. The study aims to analyze the legal framework and implementation of credit agreements in bank lending, as well as legal protection for creditors and debtors. It employs normative legal research using statutory and conceptual approaches, based on a literature review of primary and secondary legal materials. The analysis assesses whether credit agreements comply with applicable law. The study emphasizes that responsible lending requires valid agreements, clear and transparent clauses, objective assessment of borrowers’ creditworthiness, and the establishment and enforcement of collateral in accordance with legal procedures. Banks must apply prudential principles, while borrowers should understand and fulfil their contractual obligations. These measures are essential to legal certainty, balanced protection of the parties, and banking stability.]]>
