<![CDATA[General Background: The Merah Putih Cooperative is a village-based cooperative model established to strengthen rural economic development and community welfare in Indonesia. Specific Background: Its financing mechanism has raised legal concerns regarding the use of Village Funds to support loan repayments, particularly under Minister of Finance Regulation Number 49 of 2025 and subsequent regulatory changes. Knowledge Gap: Previous studies have focused on cooperative institutional development, legal establishment, and governance, while the legal status of Village Funds as support for cooperative financing and debt repayment remains insufficiently examined. Aims: This study examines the mechanism of Village Fund allocation for Merah Putih Cooperative financing and analyzes its legal position as loan security from the perspective of civil obligations law. Results: The normative legal analysis indicates that under the former regulatory framework, Village Funds functioned as administrative support for loan repayment and resembled a guarantee, but did not fully qualify as personal or material security under civil law. The mechanism was considered sui generis because Village Funds are public finances subject to statutory restrictions. Subsequent regulations changed the financing structure by placing PT Agrinas Pangan Nusantara (Persero) as the borrower for physical infrastructure development. Novelty: This study connects cooperative financing regulations, public finance restrictions, and civil law obligations to explain the changing legal position of Village Funds. Implications: The findings highlight the need for regulatory consistency, legal certainty, and compliance with public financial management principles in implementing cooperative financing policies. Key Findings Highlights Village Funds under the former framework resembled repayment guarantees but did not fully qualify as civil law security. Public financial restrictions limit the village government's authority to use Village Funds for cooperative debts. The 2026 regulatory framework shifted financing to PT Agrinas Pangan Nusantara for cooperative infrastructure development. Keywords : Village Funds, Merah Putih Cooperative, Cooperative Financing, Civil Law Obligations, Public Finance]]>
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