LEGAL FRAMEWORK AND EFFECTIVENESS OF BANK RESOLUTION BY THE INDONESIA DEPOSIT INSURANCE CORPORATION

Napitupulu, Diana R. W. and Hossain, Mohammad Belayet and Akbar, Bahrullah (2025) LEGAL FRAMEWORK AND EFFECTIVENESS OF BANK RESOLUTION BY THE INDONESIA DEPOSIT INSURANCE CORPORATION. Jurnal Hukum UNISSULA, 41 (3). pp. 794-818. ISSN 1412-2723

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Abstract

Bank failures pose serious systemic risks to financial stability andpublic confidence. In Indonesia, the Deposit InsuranceCorporation plays a crucial role in resolving troubled banks tomaintain financial system stability and protect customers. Thisstudy 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 Number9 of 2016 provide legal certainty and support systemic stability.The research method uses a normative legal approach, examiningrelevant laws and regulations, including early interventionmechanisms, resolution planning, and resolution strategies suchas purchase and assumption, bridge banking, and liquidation. Theinteraction between Deposit Insurance Corporation, Bank ofIndonesia, and the Financial Services Authority is also examinedto understand inter-authority coordination in crisis scenarios. Thefindings indicate that the current legal framework is flexibleenough to handle troubled banks, but still faces challenges incoordination, transparency, and legal certainty. In conclusion,Deposit Insurance Corporation has a central role, but theeffectiveness of resolution depends on clear mechanisms, goodcoordination, and a strengthened legal framework to maintain thecredibility and stability of the Indonesian financial system.

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