Good governance in the implementation of banking credit guaranty auction with security right and its obstacles in indonesia

Nowadays, non-performing loan (“NPL”) and the settlement of such NPL in banking sector in Indonesia still constitute as crucial issues. This article aims to: (1) find out provisions on Good Governance in relation to auction process over guaranty with security right attached to it in relation to NPL settlement in banking sector in Indonesia; as well as (2) to dig deeper the obstacles in settling NPL through auction institution. This is a normative legal research that uses primary and secondary legal sources through literature study as well as supporting data from various articles and cases. The large number of NPLs in the banking sector is followed by the increment of NPL settlement that uses auction institution in executing credit guaranty, one of them with security right, to pay off debtor debts to the bank. Auction institution is chosen by bank as it is faster and easier than using writ of execution available in the District Court. The existing provisions on Good Governance in auction already adequate; however, there are still obstacles to implement auction over guaranty with security right attached to it in banking sector in relation to NPL problem, ranging from the period before the auction, at Court, at auction, and in executing the guaranty with security right.