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The Village Credit Institutions (LPD) were established in accordance with the 1988 Bali Level I Regional Regulation for Village Credit Institutions. According to Law No. 1 of 2013 Concerning Microfinance Institutions, this LPD is in a privileged position. LPDs were established without the Decree of the Governor of Bank Indonesia and permission from the OJK. However, what is concerning is how Law Number 1 of 2013 concerning Microfinance Institutions views the legal protection of the LPD in Bali, and what are the legal remedies for the LPD in addressing issues if there are clients that default. The results of this study indicate that the LPD does not have formal legal protection in Law Number 1 of 2013 against Village Credit Institutions in Bali, which cannot be equated with other Microfinance Institutions. Without a directive from the BI Governor and the establishment permit from the OJK as one of the requirements, the LPD would not be able to turn to BI for assistance in the event of a financial emergency because it is not governed by Bank Indonesia. Hence, the legal remedies that can be taken by the Village Credit Institution in dealing with defaults committed by their customers are by providing Warning Letters (SP1, SP2, and SP3. If sending a warning letter to handle the situation is ineffective, the LPD will assign the issue to Bendesa Adat. Then the traditional chief approaches the debtor who does not pay off his credit at the LPD. If the debtor disregards this, the traditional chief will conduct a Paruman at which the decision of the sanctions handed to the defaulting debtor will be decided. |
