<![CDATA[This research aims to conduct a legal analysis of the effectiveness of implementing the principle of prudence in the credit disbursement cycle, as well as to examine procedural abuses that frequently occur and serve as loopholes for both internal and external parties.This study is a normative legal study employing a statutory approach, a case-based approach, and a conceptual approach. The legal materials used include primary and secondary sources. The technique employed for collecting legal materials is literature review. This study utilizes a deductive analytical method, which involves drawing conclusions from general principles to specific cases. This study analyzes the implementation of the Prudence Principle as a mandatory legal norm in maintaining banking stability and public confidence. Through the cases of Bank Mandiri Bukittinggi, BPD NTT, and Bank Muamalat Harkat, a significant disconnect was found between regulations (the Banking Law and the Sharia Banking Law) and operational practices. Violations include failures in Know Your Customer protocols, manipulation of financial data due to internal collusion, and defects in the authenticity of collateral documents. The study concludes that disregard for these principles degrades bank functions and threatens systemic stability. Regulatory effectiveness requires not only compliance with formalities but also depends on managerial integrity, strict internal oversight, and the ability to detect procedural deviations early on.]]>
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