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All Journal JURNAL HUKUM Greenation International Journal of Law and Social Sciences
Diana R.W. Napitupulu
Universitas Kristen Indonesia, Indonesia
Religion Humanities Law, Crime, Criminology & Criminal Justice Social Sciences

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Legal Framework and Effectiveness of Bank Resolution by the Indonesia Deposit Insurance Corporation Diana R.W. Napitupulu; Mohammad Belayet Hossain; Bahrullah Akbar
Jurnal Hukum Vol 41, No 3 (2025): Jurnal Hukum
Publisher : Unissula

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.26532/jh.v41i3.46982

Abstract

Bank failures pose serious systemic risks to financial stability and public confidence. In Indonesia, the Deposit Insurance Corporation plays a crucial role in resolving troubled banks to maintain financial system stability and protect customers. This study aims to analyze the legal framework for bank resolution, specifically the Deposit Insurance Corporation authority, responsibilities, and mechanisms for dealing with troubled banks, and the extent to which Law Number 24 of 2004 and Law Number 9 of 2016 provide legal certainty and support systemic stability. The research method uses a normative legal approach, examining relevant laws and regulations, including early intervention mechanisms, resolution planning, and resolution strategies such as purchase and assumption, bridge banking, and liquidation. The interaction between Deposit Insurance Corporation, Bank of Indonesia, and the Financial Services Authority is also examined to understand inter-authority coordination in crisis scenarios. The findings indicate that the current legal framework is flexible enough to handle troubled banks, but still faces challenges in coordination, transparency, and legal certainty. In conclusion, Deposit Insurance Corporation has a central role, but the effectiveness of resolution depends on clear mechanisms, good coordination, and a strengthened legal framework to maintain the credibility and stability of the Indonesian financial system.
The Authority of the Indonesia Deposit Insurance Corporation (LPS) to File Bankruptcy Petitions Against Controlling Shareholders of Non-Systemic Failed Banks Diana R.W. Napitupulu
Greenation International Journal of Law and Social Sciences Vol. 3 No. 4 (2025): (GIJLSS) Greenation International Journal of Law and Social Sciences (December
Publisher : Greenation Research & Yayasan Global Resarch National

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.38035/gijlss.v3i4.698

Abstract

This article examines the legal authority of the Indonesia Deposit Insurance Corporation (Lembaga Penjamin Simpanan/LPS) to file bankruptcy petitions against controlling shareholders of non-systemic failed banks. The issue arises from the need to recover state funds used in bank resolution while simultaneously upholding fundamental principles of corporate and insolvency law, particularly limited liability and legal certainty. Using normative juridical research, this study analyzes statutory provisions governing deposit insurance, banking supervision, and bankruptcy, complemented by doctrinal analysis and relevant legal principles in financial regulation. The article argues that the authority of LPS to initiate bankruptcy proceedings against controlling shareholders constitutes a special legal mechanism that departs from the general concept of shareholder immunity. Such authority is designed to prevent moral hazard, ensure accountability of bank owners, and protect public interests embedded in the stability of the financial system. In the context of non-systemic failed banks, this mechanism reflects a policy choice to prioritize efficient recovery of resolution costs without triggering broader systemic risk. However, the exercise of this authority raises several legal challenges. First, ambiguities remain regarding the scope and limits of LPS’s standing before the Commercial Court, particularly in establishing a direct causal link between the actions of controlling shareholders and the bank’s failure. Second, the interaction between the LPS Law and the general Bankruptcy and Suspension of Debt Payment Law creates potential tensions concerning procedural safeguards and the principle of due process. Third, inconsistent interpretation of shareholder liability may undermine predictability in judicial practice. This article concludes that while the authority of LPS to file bankruptcy petitions against controlling shareholders of non-systemic failed banks is legally justifiable as a lex specialis regime, its implementation requires clearer statutory standards and more consistent judicial interpretation. Strengthening these aspects is essential to balance public financial protection with the rule of law and shareholder rights.
Co-Authors Bahrullah Akbar Mohammad Belayet Hossain