Proposed Law on Movable Assets as Collateral


Banks want collateral of immovable properties apart from the primary securities. However, the government is going to introduce a new law as an alternative to this collateral. This type of collateral can be used when the borrower has no enough immovable assets to cover the loan facilities. 

This type of collateral will include raw materials for export products, work orders, precious metals such as gold, certificates of deposits in banks and financial institutions, and fruit-bearing trees. Financial Institutions Division has published the draft copy of the law for  opinion from the public. The government has initiated this law for expanding the credit facilities. 

Raw materials for making export products with proper documents as proof can be used as collateral. Gold, silver and other precious metals with certificates from any recognised authority on their weight and purity will also be regarded as collateral. 

A well-known company's share certificate and documents of patent or intellectual property rights can be put as collateral as well.

Moreover, furniture, medicinal plants, electronic products, software, apps, agricultural products, minerals, vehicles, processed fish and livestock, values of which can be calculated, are on the list of movable assets to be used as collateral.

At present, banks also disburse some loans against savings certificates and Deposit Pension Schemes but that is not applied to business loans. 

After the draft is passed into a law, it will be easy to get loans for new businessmen and entrepreneurs of cottage, micro, small, and medium enterprises.

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