The Application of Force Majeure in the Resolution of Unpaid Debts at Banking Institutions Resulting From Natural Disasters

Abstract

The objective of this study was to examine how non-performing credit agreements resulting from natural disasters associated with force majeure are settled, and the measures taken by banks to resolve bad loans. The research employed both juridical normative and descriptive analytic methods, analyzing primary and secondary data and evaluating them qualitatively with the help of legal provisions. Qualitative descriptions were used to reinforce the previous description and answer the fundamental questions, thus leading to valuable conclusions and suggestions. The findings of the study disclosed that credit contracts did not have any regulations regarding force majeure, making it challenging for banks to execute them. This resulted in debtors, mainly being farmers, encountering issues in paying off their loans. The strategy to tackle non-performing loans was to clear any credit owed by individuals who had been relocated. This approach provided legal protection by granting certainty for people affected by natural disasters.