Analysis Of Non-Performing Loans Handling Strategy Using The 5C Approach at The Regional Public Company (Perumda) Rural Bank (BPR) Bank Gresik

Abstract

This study aims to identify the factors contributing to non-performing loans, analyze the roles of internal and external parties in addressing them, and formulate recommendations for improving the handling of non-performing loans at the Regional Public Company (Perumda) Rural Bank (BPR) Bank Gresik. The research employs a qualitative descriptive method, with data collected through interviews, observation, and documentation. The informants include the Head of the Marketing Division, the Head of the Collection Division, Account Officers (AO), and borrowers experiencing credit issues. The study adopts the 5C credit analysis approach, which consists of Character, Capacity, Capital, Collateral, and Condition of Economy. The findings reveal a significant gap between the 5C analysis procedures applied by Perumda BPR Bank Gresik and the actual conditions of borrowers in the field. This gap is especially evident in the aspects of Character and Capacity, which are identified as the main causes of the high Non-Performing Loan (NPL) rate. Internally, the bank’s shortcomings include weak credit analysis during feasibility assessments, inadequate evaluation of the borrower’s business sector, lack of in-depth information gathering on potential borrowers, and insufficient post-disbursement supervision and monitoring. On the borrower’s side, internal factors include poor financial management, business or employment difficulties, and a lack of good faith. External factors affecting both the bank and borrowers include natural disasters, unfavorable economic conditions, and climate change. The handling of non-performing loans is carried out in accordance with established SOP, including giving SP letters 1 to 3, summoning the borrower, somasi, conducting collection, restructuring, and executing collateral withdrawal and auction.