http://doi.org/10.22373/jose.v4i2.3311   
Received: 1 September 2023, Revision: 7 September 2023, Accepted: 12 September 2023.
E-ISSN: 2774-3543; P-ISSN: 2774-3551,
Copyright @2023. Published by Program Studi Ekonomi Syariah Pascasarjana UIN Ar-Raniry 

EVALUATING NPF OF MURABAHA SETTLEMENT STRATEGY: 
RISK MANAGEMENT AND DSN-MUI FATWA PERSPECTIVE

Said Rafli Ridha1
State Islamic University Ar-Raniry, Indonesia
Fithriady2
State Islamic University Ar-Raniry, Indonesia 
Rika Mulia3
State Islamic University Ar-Raniry, Indonesia

E-mail: 1saidrafliridha@gmail.com, 2fithriady@ar-raniry.ac.id, 3rika.mulia@ar-raniry.ac.id
ABSTRACT:
Non-Performing Financing (NPF) is one of the indicators in evaluating bank performance. Financing products with murabaha contracts are one of the products that dominate the Islamic banking industry where the percentage of its NPF will also affect profits. This study examines the strategy implemented by one of the Bank Syariah Indonesia (BSI) Area Office in Aceh Province towards Murabaha NPF from two perspectives, risk management and Fatwa DSN-MUI using a descriptive approach. The results conclude that in handling NPF, banks begin with negotiation/mediation approach, then gradually rescheduling, restructuring, reconditioning, execution of collateral/auctions and litigation. Those steps are in accordance with risk management concept in terms of preventing NPF and consistent with Fatwa DSN-MUI in terms of NPF settlement. However, among the obstacles are bad character debtors so that the settlement process will take a long period of time and keep being suspended. This is certainly a significant viewpoint for banks that educating and socializing the management of financing must be explained from the beginning and ensure that debtors understand all related applicable bank regulations.

Keywords: Murabaha Financing, Non-Performing Financing, Risk Management, Fatwa DSN-MUI, Islamic Banks.
ABSTRAK:
Pembiayaan Bermasalah (NPF) adalah salah satu indikator dalam mengevaluasi kinerja bank. Produk pembiayaan dengan akad murabaha adalah salah satu produk yang mendominasi industri perbankan syariah di mana persentase NPF-nya juga akan memengaruhi keuntungan. Penelitian ini menguji strategi yang diterapkan oleh salah satu Kantor Cabang Bank Syariah Indonesia (BSI) di Provinsi Aceh terhadap NPF Murabaha dari dua sudut pandang, manajemen risiko dan Fatwa DSN-MUI dengan menggunakan pendekatan deskriptif. Hasilnya menunjukkan bahwa dalam penanganan NPF, bank dimulai dengan pendekatan negosiasi/mediasi, kemudian secara bertahap melakukan penjadwalan ulang, restrukturisasi, rekondisi, eksekusi jaminan/lelang, dan litigasi. Langkah-langkah tersebut sesuai dengan konsep manajemen risiko dalam mencegah NPF dan konsisten dengan Fatwa DSN-MUI dalam penyelesaian NPF. Namun, di antara hambatan tersebut adalah karakter buruk para debitur sehingga proses penyelesaian akan memakan waktu yang lama dan terus ditangguhkan. Ini tentu saja merupakan pandangan penting bagi bank bahwa edukasi dan sosialisasi manajemen pembiayaan harus dijelaskan dari awal dan memastikan bahwa para debitur memahami semua peraturan bank yang berlaku terutama yang terkait dengan pembiayaan.

Kata kunci: Pembiayaan Murabaha, Pembiayaan Bermasalah, Manajemen Risiko, Fatwa DSN-MUI, Bank Syariah.

INTRODUCTION
With the enactment of the Islamic Banking Development Law No.10 in 1998 in the reform era, this Law provides a legal basis and types of businesses that can be run by Islamic banks. Law Number 21 of the Republic of Indonesia of 2008, the function of a bank is that the bank collects funds or distributes public funds. The risk of non-performing financing (NPF) is that there is no return on principal or financing capital and compensation, ujrah or profit sharing, as originally agreed in the financing agreement between the Islamic Bank and the debtors. The more NPF appeared, the more capital that must be provided by the bank. On the other hand, the capital that must be provided by the bank comes from the bank's own capital so that Islamic banks can reduce their capital.
Islamic banks NPF generally dominated by murabaha contract. Two possibilities for murabaha financing, which pose unexpected risks: between losses and gains. To anticipate this, there are possibilities that can occur, such as problematic financing that can occur caused by bad internal factors, bad internal debtors, or bad external banks, and the debtors themselves. Banks cannot avoid risks, such as market, liquidity, operational, legal, strategic, and financing and decision financing risks. Risks in financing that will have to be managed quickly and precisely, because if there are several mistakes in managing the financing risks, it can have very fatal consequences resulted in increasing NPF
According to the provisions of Bank Indonesia (BI) No. 7/2/PBI/2005 in BI circular letter No. 7/3/DPNP 31st January, 2005, concerning Asset Quality Assessment for Commercial Banks, BI Regulation No. 14/15/PBI/2012 concerning Asset Quality Assessment for Commercial Banks, and the Financial Services Authority (OJK) Decree No. 29/POJK.05/2014 concerning the Implementation of Financing Company Businesses, there are five levels of credit/financing score quality for prospective debtors . Firstly, Col-1 (Pass), the highest collectability category. The debtors have a good track record, performing financing, never experienced delays in payments or problems in the form of financing arrears. Then, Col-2 (Special Mention). The second level, means in special attention, the debtors have a track record of experiencing delays in payment of principal and margin that exceeds the due date for 30 - 90 days. Even though it is still included in the performing financing, generally banks consider the debtors as bad character. Ordinary collection or restructuring based on an agreement will be carried out.
The following category is Col-3 (Substandard), where the debtors experiences delays in payment of principal and interest for 90 - 120 days after the maturity period ends. The bank is obliged to issue the first warning letter. They start calculating accruals for outstanding principal and margin arrears, ongoing penalties arrears, bookkeeping administration arrears, and other arrears through the issuance of factoring. Then follow by Col-4 (Doubtful), means doubt, indicates a delay in payment, both principal and interest installments. The delay in payment lasts between 120 - 180 days from the expiration date. At this stage, Col-4 can be manually shifted to Col-5 if the bank has obtained confidence that the debtors is not only unable to pay his obligations, but also does not have the good faith to settle his obligations. At this stage, financial institutions are obliged to issue a warning letter-2 and warning letter-3 to debtors. Not only that, banks can already assume that the principal and margin instalments are not paid and are ready to take the settlement of NPF through the auction of collateral in accordance with applicable law.
The last category is Col-5 (Loss), which means Loss of Credit, the lowest collectability level which is often referred to by another name for Bad Financing. At this level, the debtors have the status of a NPF because it is unable to pay the principal and interest installments beyond the due date. That is 120 - 180 days. Banks are obliged to settle NPF by auctioning off the debtor’s collateral to cover the risk of bad financing. Prior to the auction, three warning letters were sent, issued factoring, and reported the history of financing handling and settlement, starting from the history of collection, negotiation, and restructuring (if there is a restructuring).
Efforts that should be made by banks in resolving NPF, namely: Rescheduling, by changing the payment schedule for debtors obligations or changing the time period; Terms of return (reconditioning), by changing some or all of the financing requirements, for example changing the payment schedule, the amount of installments/installments, the term or giving a discount as long as it doesn't add to the remaining debtors obligations that must be paid.; Restructuring, with changes in financing requirements, it is not limited to rescheduling and reconditioning, including; addition of several bank financing facility funds; concluding the financing agreement, the conversion of the financing into medium-term sharia securities; and conversion of financing into company temporary equity participation.; Execution of collateral, collateral as a legal provider to the bank to return the capital/loan provided, in the sense that the collateral is available at any time to be executed if necessary to be cashed to pay off the debtor’s debt.; and Write off, remove unproductive asset accounts from the books. It is also carried out for NPF which can be expected to become uncollectible, even though the bank can still make transfers of the bad financing. 
The purpose is to improve the condition of NPF. The purpose of this study was to analyze the settlement strategies towards NPF for murabaha products implemented by one of the Bank Syariah Indonesia (BSI) Area Office in Aceh Province from the perspective of risk management and the DSN-MUI Fatwa.

METHOD
This study used a qualitative method by conducting in-depth interviews with Islamic Bankers from one of Bank Syariah Indonesia Area Office in Aceh Province: Area Recovery and Collection Unit as well as Area Risk Financing Unit. The primary data used is the results of interviews that were conducted for up to 60 minutes and informants were asked questions about their settlement strategies in handling the NPF with murabahah contract prior and after the debtors receive the financing.  Secondary data is also collected from various sources such as previous research journal articles, as well as from digital media which are considered to have credibility for published information. Data were analyzed using the Miles and Huberman method namely data reduction, data presentation, and conclusion/verification.

DISCUSSION
There is a Risk Unit at BSI who’s responsible to supervise debtors who experience late payments ranging from 0 to 90 days which are managed by the Business Unit, monitor debtors who are in arrears, and also provide information to the Recovery Unit regarding debtors who have potential installment arrears. The risk unit in preventing NPF for murabaha products, whether productive or consumptive, uses a method, namely the Risk Acceptance Criteria (RAC). As Fachryana and Nadia also stated that Islamic banks also really need various kinds of procedures and methodologies that can be used to identify, measure, monitor, and control a risk that can give rise to various banking business activities. RAC is a criterion to ensure that the debtor fulfills the terms and conditions in fulfilling his obligations later, for example the minimum salary/income or line of business the debtor works for. The ratio of debtors related to their ability to pay is also analyzed and verified by the Risk Unit.
According to one of Unit Risk staff (Area Small and Medium Entreprises Verification), “The prevalence of non-performing murabaha financing, a phenomenon not unique to this bank but also observed elsewhere, can be attributed primarily to the behavior of the debtors themselves, who often resist adhering to the scheduled installment payments and the presence of side streaming, where funds are used contrary to the contract terms. These two factors exert a more significant influence on the performance of productive murabaha financing”.
Meanwhile, in consumptive murabaha financing, which is dominated by employees (government or private sector), there are debtors whose salary payments do not go through the bank, and there are even debtors whose salary was initially paid at the bank and then moved to another bank when the financing has not been paid off. Another cause is that there are debtors who have experienced a decrease in salary or position, so that there is a missing or decreased salary component which results in no longer matching the initial calculation of the monthly installment amount. So, the risk management here is by adjusting the debtor’s payment pattern by calculating the ability of the debtors to pay the bank every month without any difference in installments that do not match income.
Settlement of NPF on murabaha products by carrying out prevention or settlement, namely first by monitoring the condition of the debtors on a regular basis. Second, if the financing is productive by looking at the current condition of the debtor’s business. Third, if consumer financing indicates over-financing, such as reduced salary than before. Thus, in analyzing a prospectus debtor whether quantitative or qualitative analysis must be conducted by Risk Financing Unit to ensure the financing that will be given is comply.
According to the Fatwa DSN-MUI, the settlement of problematic financing for murabaha products is by negotiation/mediation, rescheduling, restructuring, reconditioning, execution of collaterals and litigation. Negotiation/mediation, if there is a dispute between the two sides, a settlement must be reached, such as by peaceful means (al-sulh), where the disputing parties will consult together, by resolving the problems they face in a peaceful way, without harming other parties. This deliberation stage is important, because it is the beginning of the bank in supporting debtors in completing their obligations to the bank. Apart from that, this method is also an attempt to approach the bank and the debtor, so that the bank knows the cause of the debtor being negligent in making a payment, here the bank can remind and consult with the debtor regarding payments to the debtor. Although this method does not have specific provisions in the Fatwa, it is based on sharia principles (al-sulh). The second stage is giving a warning letter, this is done if within the period set by the bank you still cannot pay off the payment.
Rescheduling based on DSN Fatwa No.48/DSN-MUI/II/2005 Islamic financial institutions can reschedule murabaha bills for debtors who cannot complete payments within the agreed timeframe because the debtor's business is not good but the debtor remained smooth, even asking for relief from payment of financial payments. At the time of rescheduling, the bank provides support in the form of additional allowances or time for debtors to pay installments that are due (in installments) without changing the selling price.
Requirements for returning or reconditioning based on DSN Fatwa No.46/DSN-MUI/II/2005 for requests to cut bills or repair again. The Islamic financial institution can issue deductions from the total payment obligations in a timely manner. As has been done by banks, namely saving funds by changing some or all of the funding requirements, not limited to changes to the funding schedule, time period, granting of discounts and other requirements, as well as other requirements as long as they do not involve changes in the maximum capital.
Restructuring or rearranging based on DSN Fatwa No.49/DSN-MUI/III/2005 concerning the conversion of murabaha contracts, the conversion of murabaha contracts is also called restructuring, namely changes in financial needs. BSI performs restructuring or rescheduling, by adding additional facility funds, converting financing contracts and converting financing into temporary equity participation.
Execution of collateral or auctions, this stage is also the settlement of problematic murabaha financing by deliberation for consensus provided by BSI to its debtors who experience problematic financing. Here, before the execution of the collaterals, BSI gives its debtors the opportunity to sell the collateral for the entire selling price to the debtor, provided that later it can cover the remaining debt obligations of the debtor. Based on the provisions above, it is in accordance with the DSN MUI Fatwa No. 47/DSN-MUI/II/2005 from points 1 to 4 where the murabah/collateral object is sold at an agreed price, the debtor sells the remaining debt from the sale proceeds, the excess from the sale fully belongs to the debtor, if the proceeds from the sale are smaller then the remaining debt remains the debtor's obligation.
The settlement that is often carried out by the Recovery Unit for NPF on murabaha products, namely; negotiation/mediation, restructuring, rescheduling and reconditioning. If there is no solution from these four matters, then they will conduct an auction on the debtors's collaterals, and if it is still not settled, then with the last action, through litigation (court). These results also supported by related previous research by Ibrahim, Nadia, and Rakhmawati that conclude techniques for settlement of the NPF consist of ‘on the spot’, summons, billing, restructuring, collateral selling and written off, and penalty charging. 
Based on the results of interviews with Area Collection and Recovery Unit staff, he mentioned that the settlement of NPF that was applied had been carried out well in minimizing the financing risks that occurred. The bank provides convenience and flexibility by providing deferrals to debtors in carrying out payment and collection obligations.

CONCLUSION
Analysis of the strategy used by Bank Syariah Indonesia (BSI) during NPF settlement for murabaha products according to risk management are; first, risk identification, by analyzing the debtor's character, ability to pay, business conditions, collateral value to the state of the economy. Second, risk measurement by monitoring the collectability status of debtors, pass, special attention, less pass, doubtful and loss. Finally, risk monitoring is carried out since the financing application submitted by the prospective debtors, until the financing is paid off. While the analysis of the strategy used by BSI on NPF murabaha products settlement is in accordance with the DSN-MUI Fatwa, namely by negotiating/mediation, rescheduling, reconditioning, restructuring, execution of collaterals, and auctions.

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