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Deeds in Banking Transactions

Written by Riska Destriyanti on 02/08/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

Introduction

Banks are financial institutions that provide numerous benefits to their customers, including money loaning services with customer assets as collateral, such as land certificates and vehicle certificates. To fully leverage these services, it is essential to understand the deeds and documentation involved in the credit application process, which is crucial for anyone looking to borrow money from a bank.

Definition

Deeds refer to legal documents that record agreements or obligations between parties. In the context of banking services, deeds play a crucial role in formalizing various financial agreements and arrangements, such as loan agreements or property transactions. This documentation is essential for ensuring clarity and legal protection for all parties involved.

Commercial banks, which can operate either conventionally or based on sharia principles, utilize deeds to support their diverse range of services. These banks offer payment services and credit to customers for various needs, including business capital, home renovation, health, education, and daily necessities. By providing these services, banks facilitate financial planning and stability for individuals and businesses.

Credit, in particular, is a vital banking service where a bank provides money or bills based on a loan agreement, a type of deed, between the bank and the borrower. This agreement requires the borrower to repay the debt within a predetermined period, often with interest. Understanding the terms and conditions outlined in these deeds is essential for borrowers to make informed decisions and manage their financial obligations responsibly.

Types of loans:

Investment Credit
Loans for expanding or developing a business, such as building new projects or factories.

Working Capital Credit
Loans to increase a company's production operations capability, such as buying raw materials or paying employees.

Productive Credit
Loans to increase business sectors related to production or investment.

Consumer Credit
Loans for personal or institutional consumption, such as housing loans or vehicle loans.

Trade Credit
Loans for buying commodities or goods to be traded or resold, such as export-import credit.

Types of Deeds in Banking Services

Bonds
An agreement between the creditor and debtor detailing the loan amount, interest, provisions, guarantees, and terms and conditions of the credit agreement.

Power of Attorney to Encumber Mortgage Rights
Allows the creditor to manage the collateral, including the process of granting mortgage rights and signing related documents.

Deed of Granting Mortgage Rights
Specifies the terms and conditions for granting mortgage rights from the debtor to the creditor, giving the creditor priority in claims.

Deed of Conformity
Adjusts debt securities if the debtor takes an additional credit facility.

Personal Guarantee
Based on the debtor’s personal wealth, ensuring that personal assets can be used to pay off the debt if necessary.

Company Guarantee
Similar to a personal guarantee but involves the company's assets.

Deed of Fiduciary Guarantee
Used when the collateral is movable objects like cars or motorcycles, and must be registered with the Ministry of Law and Human Rights.

The Importance of Deeds in Banking Services

Understanding the deeds involved in banking services is essential for several reasons:

Legal Compliance
Deeds ensure that all legal requirements are met during the credit application process, protecting both the creditor and the debtor.

Clarity and Transparency
Deeds provide clear terms and conditions regarding the loan, including the loan amount, interest rates, and repayment schedule.

Security
Deeds serve as legal documentation of the collateral provided, ensuring that the creditor has a claim on the assets if the debtor defaults.

Proof of Agreement
Deeds act as formal proof of the agreement between the creditor and the debtor, which can be used in legal proceedings if necessary.

Risk Mitigation
Proper documentation through deeds helps mitigate risks for both parties by clearly outlining responsibilities and obligations.

Benefits of Deeds in Banking Service

Engaging in the proper preparation and execution of deeds in banking services offers several benefits:

Legal Protection
Deeds provide legal protection for both the creditor and the debtor, ensuring that the terms of the loan are enforceable in a court of law.

Credibility and Trust
Properly executed deeds enhance the credibility of the transaction, fostering trust between the creditor and the debtor.

Ease of Dispute Resolution
In the event of a dispute, deeds serve as formal proof of the agreement, making it easier to resolve conflicts through legal channels.

Financial Planning
Clear documentation helps both parties plan their finances better, as all terms are explicitly stated and agreed upon.

The Process of Deeds in Banking Services

The process of preparing and executing deeds in banking services involves several steps:

Document Collection
- For Individuals
  Collect personal identification documents such as KTP (Identity Card), KTP of spouse (if applicable), Family Card, Marriage Certificate (if applicable), and proof of collateral ownership.
- For Companies
  Collect documents such as KTP of Directors and Commissioners, Shareholder Approval, Company deed and permits, and proof of collateral ownership.
After the document is complete, the Bank will provide other supporting documents, such as an order list containing the estimated price of the guarantee provided by the Creditor and a credit certificate containing the loan amount, interest, fees, and other provisions.
Notary Preparation
The notary will prepare the required deeds based on the order list provided by the bank. They will check the land certificate to ensure it is free from disputes and not already used as collateral elsewhere.

For land certificates, the notary will prepare a Deed of Granting Mortgage/Akta Pemberian Hak Tanggungan (APHT) and a Loan Agreement.

For movable assets like cars or motorcycles, the notary will prepare a Deed of Fiduciary Guarantee.

Signing of Deeds
The debtor and creditor will sign the necessary deeds, such as the Loan Agreement and APHT.

Registration
The notary will register the Mortgage on the land at the Land Office within 7 days after signing the APHT. For fiduciary guarantees, the notary will register the deed with the Ministry of Law and Human Rights of the Republic of Indonesia.

Completion
Once all deeds are signed and registered, the credit application process is complete, and the bank can disburse the loan.

How We Can Help

Putranto Alliance can assist with your banking service deeds to ensure compliance with relevant regulations and maintain integrity within your financial operations. Our team of experts specializes in banking and financial regulations, and we will work with you to create or amend your deeds to avoid potential issues and ensure adherence to the latest standards.

Our services can assist in the following ways:

Notarial Services
We provide comprehensive notarial services to prepare and execute the necessary deeds for your credit application. Our experienced notaries ensure that all legal requirements are met and that the deeds are properly documented and registered.

Consultation
Our team of competent consultants in the banking sector can offer expert advice on the credit application process, including the types of loans available, the necessary documentation, and the specific deeds required.

Document Verification
We assist in verifying the authenticity and completeness of the documents required for the credit application, ensuring a smooth and efficient process.

Legal Support
The notary will register the Mortgage on the land at the Land Office within 7 days after signing the APHT. For fiduciary guarantees, the notary will register the deed with the Ministry of Law and Human Rights of the Republic of Indonesia.

Customized Solutions
We offer tailored solutions to meet the unique needs of each client, whether you are an individual or a company, ensuring that the credit application process is as seamless as possible.

FAQs

What steps will be carried out by the notary after we provide the complete documents to the bank?

After submitting the documents to the bank, the bank will process them and provide an order list to the notary. The notary will then check your collateral and determine the necessary deeds. If your collateral is a land certificate, the notary will verify the certificate, prepare a Debt Letter, and a Power of Attorney to Encumber Mortgage Rights (SKMHT). Each type of collateral may require different deeds.

How long does the process of making this deed take?

The exact time frame can vary. We can provide an estimated time after receiving the complete documents from the bank. The process involves several steps, including document verification, deed preparation, signing, and registration, which can affect the overall duration

What is the consequences of not using a deed?

Without proper deeds, both creditors and debtors are at risk of legal disputes and financial losses. Deeds provide formal proof of agreements and protect against third-party claims. They ensure that the terms of the loan are clear and enforceable, reducing the risk of misunderstandings and conflicts.

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