Non-performing loans (NPLs) represent a serious issue in the banking industry, posing a threat to the financial stability of financial institutions. In conducting their activities, banks adhere to Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking, Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, and relevant regulations by the Financial Services Authority. The prudential principle, as one of the
fundamental principles in banking risk management, becomes pivotal in preventing and managing credit risks that lead to NPLs. This research aims to analyze the implementation of the prudential principle in addressing NPL cases at PT. BPR
Madani Sejahtera Abadi, focusing on the processes of identification, evaluation, and risk management in credit provision. The research method used is normative research conducted by examining literature or secondary data. Conclusions are drawn from the analyzed data using deductive methods, indicating that the implementation of the prudential principle in the banking sector is still suboptimal in some aspects, with instances of negligence by banks in analyzing customer data leading to NPL occurrences.