Imperfect Information of Bankers Clause in Credit Agreements in Banking Institutions: Further Legal Impact

Hamzah, Rosyidi and Admiral, Admiral and Adinda, Fadhel Arjuna and Woodward, John (2023) Imperfect Information of Bankers Clause in Credit Agreements in Banking Institutions: Further Legal Impact. Jurnal Lex Scientia Law Review, 7 (2). pp. 305-315. ISSN 2598-9685

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Abstract

The main function of banking institutions is as an intermediary institution. The intermediary function is carried out by collecting funds from the public in the form of deposits (savings, deposits and current accounts) and channeling them to the public in the form of credit. To provide legal certainty in the implementation of credit, a credit agreement is needed. The credit agreement is made with a standard clause pattern, where the contents of the agreement have been made by the bank, the community as customers are forced to sign the agreement because they economically need fresh funds and their political and sociological position is weak before the bank. In the credit agreement there is a banker clause, if something happens to the customer such as death, the insurance company will pay off the remaining debt of the customer. The purpose of the banker clause is to minimize credit risk. At the time of signing the credit agreement, the customer did not get perfect information about the banker clause. Many customers died but still had to pay the remaining credit debt because the insurance company refused to make payments on claims by the bank because the customer died of certain diseases. Information on diseases that are not covered by the insurance is never conveyed to the bank customer, because the customer is represented by the bank to sign the policy. This perfect information is rarely conveyed at the time of signing the credit agreement. The customer is only represented by the bank at the time of signing the credit agreement. For this reason, clear rules are needed regarding the provision of banker clause information at the time of signing the credit agreement, the customer, bank and insurance institution must sit at one table when signing a credit agreement containing a banker clause.

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