The Role of Notaries in Loan Restructuring Impacted by Covid-19 in Islamic Banking

Abstract

This paper examines the role of notaries in loan restructuring due to the impact of Covid-19 in Islamic banking. The research problem is formulated in the followings: first, how to restructure the loan as the impact of Covid 19 in Islamic banking, and second, how is the role of a notary in loan restructuring as the impact of Covid-19 in Islamic banking. This is an empirical legal research carried out by examining primary data obtained from the field. The results of this study reveal the mechanism for loan restructuring as the impact of Covid-19 in Islamic banking, and the roles of a notary in loan restructuring as the impact of Covid-19 in Islamic banking. It is clear that the bank does not immediately approve the request for loan restructuring submitted by the customer, since the application must go through several stages of approval by the bank. In the first stage, customers shall contact the bank to convey their financial decline of income or business profit affected by Covid-19. Customers shall submit a request for loan restructuring along with the required documents. The bank will conduct online interview to verify customers, and to make a report on the results of the interview. Afterwhich, the bank will need to pay a field visit or survey to analyze the information submitted by the customer. Once, the application is approved, the bank will send a restructuring offer letter to customers to be signed with the addendum. After signing the financial addendum, customers only have to wait for the restructuring process in the bank's operational division system. In this process, notaries play a significant role in loan restructuring due to the impact of Covid-19 in Islamic banking, by making authentic deeds for the bank office and by complying with the health protocols set by the government. Another role of the notary is to legalize the addendum agreement made by the bank and the customer to carry out the authority of legalizing the deed under the hand of a notary only to guarantee and ensure the date and signature between the Islamic bank and customer applying for loan restructuring. In line with the notary's authority in providing legal counseling related to the deed making, Islamic banks generally have operational standards of implementation, and thus the addendum clause of financing has been determined by the bank.