This study is motivated by Bank BRIs policy, as declared in Circular Letter Number: SE 29-DIR/KRD/05/2019, regarding KUPEDES, specifically in section VIII concerning collateral. According to the policy, the collateral in the form of freehold land, which should ideally be secured through a Deed of Mortgage, is instead secured using a non-notarized power of attorney to sell the collateral in credit agreements with a limit below 200 million IDR. It raises concerns as it contradicts Article 20 paragraph 2 of the Mortgage Law, which stipulates that the issuance of a non-notarized power of attorney to sell collateral should not be simultaneous with the credit agreement. Hence, this study aims to examine the implementation of non-notarized collateral sale agreements for freehold land in KUPEDES credit agreements below 200 million. This study employs an empirical legal research method with a socio-legal approach. The study location was chosen at Bank BRI Unit in Mataram city, as credit agreements with collateral secured through a power of attorney to sell were found specifically in this bank. The discussion in this study focuses on BRIs considerations for issuing the policy of utilizing a non-notarized power of attorney to sell collateral. One of the principal considerations is that borrowers who borrow below 200 million IDR are predominantly small business owners and clients of Bank BRI. The policy aims to decrease the financial burden on the borrowers and the community as a whole by avoiding the costs associated with the establishment of a Deed of Mortgage. The execution of collateral bound by a non-notarized power of attorney to sell cannot be conducted in accordance with Article 20, paragraph 2 of the Mortgage Law, as the issuance of the attorney power to sell is simultaneous with the credit agreement. In this regard, Bank BRI adopts a more conciliatory approach towards borrowers who are unable to repay their loan. If an amicable settlement cannot be reached, Bank BRI, based on the provisions of the credit agreement, has the option to initiate a simplified legal proceeding before the court.

Kupedes BRI

Credit Agreements

Power of Attorney to Sell