Can Bad Loans at State-Owned Banks Lead to Corruption Cases? Yusril Explains
Jakarta, CNBC Indonesia — Coordinating Minister for Legal Affairs, Human Rights, Immigration and Corrections Yusril Ihza Mahendra has highlighted the issue of non-performing loans at state-owned banks, which could potentially be classified as criminal corruption.
The government is currently discussing revisions to the Corruption Eradication Law, including how to clarify the boundary between business losses and state financial losses that meet the criteria for a corruption offence.
Yusril said one issue requiring review in the law is the broad interpretation of Articles 2 and 3, particularly their provisions on losses to state finances and the national economy.
The two articles are central to prosecuting corruption. However, Yusril said their broad scope could result in various matters involving state losses being classified as corruption.
“The central element of a corruption offence is enriching oneself, another person or a corporation unlawfully, with the consequence of causing losses to state finances and the national economy,” Yusril said at a press conference after meeting National Economic Council (DEN) chairman Luhut Binsar Pandjaitan to discuss a review of the law, at the DEN office on Tuesday (27 October 2026).
He stressed that the discussions were not intended to remove state financial losses as an element of corruption offences. Rather, the government wants to clarify what constitutes a state financial loss and the definition of state finances used in law enforcement.
Yusril said that several laws currently define state finances, including the laws governing the Audit Board of Indonesia (BPK) and the State Treasury.
He said these differing definitions need to be clarified to ensure legal certainty and prevent divergent interpretations.
“If there are too many definitions of state finances, which one should be used and applied? People may pick and choose whichever is easier or quicker to implement. Therefore, for the sake of legal certainty in our country, we need to make the meaning of state finances clearer,” he said.
Yusril cited bank lending as an example. A loan may initially be granted after an in-depth feasibility assessment, but later become non-performing because of unforeseen circumstances.
He referred to economic changes such as the Covid-19 pandemic, which left borrowers unable to repay their loans. In such circumstances, he said, losses incurred by a bank, including a state-owned bank, should be distinguished from losses arising from corruption.
“An in-depth assessment is carried out first, and the loan is granted as feasible and reasonable. Then, along the way, unforeseen things happen. Perhaps, as during Covid, or because of other events, the borrower defaults and cannot repay the loan,” Yusril said.
He compared this approach with practices in other countries, where losses from bad loans may be treated as business risks as long as no criminal element is found.
By contrast, if there is collusion or malicious intent between bank officials and the borrower, the conduct can still be prosecuted under the criminal offence that applies.
“Even if there is a crime, collusion or malicious intent between those approving the loan and the recipient—or collusion between bank staff and the borrower—that constitutes a separate criminal offence, not corruption,” he said.
The proposed clarification of the law is intended to distinguish business decisions that result in losses from conduct that contains criminal elements. Yusril did not say, however, that all bad loans at state-owned enterprises would be excluded from corruption cases.