BLITAR – Blitar District Attorney’s Office has detained the former president director of the Blitar City Rural Bank, or BPR, over an alleged corruption case involving problematic credit distribution in 2022.
Prosecutors named two suspects in the case. They identified them by the initials ED, a former director of the regional bank, and DM, a debtor linked to the credit program.
Blitar District Attorney’s Office special crimes prosecutor Ariefulloh said investigators found signs that the credit distribution process violated internal procedures and national regulations.
“This credit distribution process did not follow proper mechanisms. Investigators found unlawful actions that caused state financial losses,” Ariefulloh said on Wednesday.
Investigators estimated state losses at around Rp 255 million. Prosecutors said the distributed loans became non-performing credit with collectibility status five since 2023.
According to investigators, the case involved working capital loans and seasonal loans. Borrowers allegedly failed to use the funds according to their intended purpose.
Ariefulloh explained that some borrowers used working capital loans for personal consumption instead of business activities.
“Some loans should have supported business operations. However, investigators found borrowers who did not meet the required business criteria,” he said.
Prosecutors also found alleged violations of the banking sector’s 5C credit principles. Banks normally use those principles to evaluate borrowers before approving loans.
Under the seasonal loan scheme, borrowers should only pay interest during the first one to six months. After that period, they must repay the main debt.
However, investigators said the credit program later became problematic. The loans also failed to operate according to the agreed scheme.
The Blitar District Attorney’s Office has questioned around 18 witnesses during the investigation. Most of the witnesses came from inside the Blitar City BPR institution.
“About 14 witnesses came from internal parties. The others came from outside parties related to collateral and business verification,” Ariefulloh explained.
Prosecutors said the investigation remains open and could expand further depending on court proceedings and additional findings.
“For now, investigators have named two suspects. However, the case development still depends on the ongoing investigation and trial facts,” he added.
The corruption case has attracted public attention in Blitar because it involves a regional government-owned financial institution that supports local economic activity and small business financing.