The difference between active and passive credit often confuses many people. Although both are financial services aimed at meeting customer needs, they serve different purposes.
Each type of credit plays a distinct role in banking activities. Active credit is productive because it’s used to grow a business, while passive credit comes from customer deposits, which are relatively inactive funds.
To understand more about their differences — from their definitions to their types — read the full explanation below!
The Difference Between Active and Passive Credit
To help you better recognize their functions and characteristics, here’s a complete breakdown of the differences between active and passive credit — including their definitions, characteristics, and types commonly used in banking.
1. Definition
In the banking world, credit services are divided into two categories: active credit and passive credit, each with a different function in a bank’s financial system.
Active credit refers to loans provided by banks to customers for productive purposes — such as business capital, MSME loans, or investment in securities.
It’s called “active” because the funds are circulated and used to generate income.
The duration of active credit varies depending on the borrower’s needs — ranging from short, medium, to long-term loans.
Meanwhile, passive credit is the opposite — it originates from funds deposited by customers in banks, such as savings, checking accounts, or time deposits.
These funds remain in the bank temporarily and can be withdrawn by the customer either anytime or after the maturity period. The bank provides interest as a form of return for these deposits.
In another context, passive credit can also be viewed as the bank’s liability to its customers, while the bank holds active credit as income-generating assets.
2. Characteristics
After understanding their definitions, it’s also important to recognize the unique characteristics of each. Below are the distinguishing features of active and passive credit:
Characteristics of Active Credit
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There is a formal agreement between the creditor and debtor specifying the loan amount, interest rate, and repayment period.
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The debtor pays interest to the creditor based on agreed terms and economic conditions.
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The loan has a specific repayment period, ranging from several months to several years.
Characteristics of Passive Credit
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Funds come from customer deposits, such as savings, checking accounts, or time deposits.
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Customers receive interest or returns on their deposits.
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The bank is obligated to return the funds according to the deposit’s terms.
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The funds remain idle temporarily and can be withdrawn per product conditions.
3. Types of Credit
Active and passive credit have different types depending on customer needs and financial conditions.
For individuals and businesses alike, understanding these types helps in choosing the most suitable banking service.
Active Credit
Active credit refers to funds disbursed by banks to customers for productive activities. Below are some common types of active credit:
1. Overdraft (Kredit Rekening Koran)
An overdraft is a credit facility provided based on customer needs. To access this facility, customers must provide collateral such as securities, stored goods, or other movable or immovable assets.
2. Acceptance Credit (Kredit Aksep)
Acceptance credit is a loan in the form of a bill of exchange that can be traded by its holder.
The bank signs the acceptance submitted by the customer as approval, allowing the document to be used for trade or business financing.
This type of credit is generally used by corporations for large-scale or international trade transactions and is not commonly offered to retail customers.
3. Reimbursement Credit (Letter of Credit)
This type of credit helps customers facilitate import transactions or payments for goods from abroad.
The bank disburses the loan after receiving proof of shipment or import documents, which the customer must repay as agreed.
4. Documentary Credit
Documentary credit is financing based on trade transaction documents such as invoices or bills of lading.
These documents serve as proof for the bank to issue a loan.
5. Securities Credit
This credit is used for purchasing securities. The bank covers part or all of the purchase cost and keeps the securities as collateral until the loan is repaid.
This type of loan is typically used by corporations or institutional investors, not individual customers.
Passive Credit
Passive credit allows customers to store funds in banks under various products according to their needs. Below are some common types of passive credit:
1. Current Account (Giro)
A current account is a deposit that can be withdrawn using a giro slip. Besides serving as a non-cash payment tool, it also functions as an instruction to transfer funds between accounts.
2. Time Deposit (Deposito Berjangka)
A time deposit can only be withdrawn after a specific maturity date. Unlike savings accounts, these funds cannot be withdrawn anytime.
3. Savings Account (Tabungan)
A savings account allows customers to deposit and withdraw funds anytime. With 24-hour ATM access, transactions are flexible and convenient.
4. Certificate of Deposit
A certificate of deposit is a negotiable time deposit instrument issued by banks.
It can be transferred to other investors and generally offers competitive interest rates as a return on funds placed for a fixed period.
5. Loan Deposit
A loan deposit refers to funds placed or loaned by one bank to another. These funds are temporary and can be withdrawn anytime as needed.
6. Deposit on Call
Deposit on Call refers to short-term deposits ranging from a minimum of seven days to less than one month.
The placement amount usually starts at around IDR 50 million and can be held in the name of an individual or group, depending on the bank’s policy. The interest rate is negotiable between the bank and the customer.
7. Automatic Roll Over Deposit
This is a type of deposit automatically renewed upon maturity according to the original agreement.
It’s suitable for customers living or working abroad and can also be applied domestically.
That’s a complete explanation of the differences between active and passive credit — from their definitions to their various types.
By understanding both, you can make wiser financial decisions when choosing banking services that best suit your needs.
When it comes to other financial services — such as funding for personal or business needs — it’s always best to use licensed and OJK-supervised financial institutions for safety and transparency.
One trusted solution is BFI Finance, which provides various financing options secured by motorcycle BPKB, car BPKB, or property certificates (house, shop, or office).
So, what are you waiting for? Fulfill your financial needs today — because #SelaluAdaJalan with BFI Finance!
