The Secure Transactions (of Moveable Assets) Bill, 2023 was placed in parliament on Tuesday, aiming to bring movable property under the definition of collateral for bank loans.
Finance Minister AHM Mustafa Kamal placed the bill, which was sent to the respective scrutiny committee for further examination. The committee was asked to submit its report within 15 days.
If enacted, the new law would bring a broader definition of collateral for bank loans.
As a result, not only immovable property but also fixed deposits or movable property like gold, silver and intellectual property can be used as collateral for loans from banks and financial institutions.
However, a movable property must be registered for a mortgage. For this purpose, it was been decided to form a separate authority for the registration of movable assets for which valuation of those is possible, as mentioned in the proposed law.
As a result, both banks and borrowers would benefit, and providing loans would be easier, as stated in the text of the bill.
In order to borrow a certain amount of money from a bank or financial institution, a visible asset of equal value like land or building must be deposited or mortgaged in the bank.
With the new Secured Transactions Bill, banks would be able to hold other floating assets to market value as collateral instead of tangible assets to borrow from banks.
According to the proposed law, from now on anyone can take loans against fixed deposits in banks, gold and silver or raw materials kept for export.
Anything that is copyrighted can be pawned to the bank. Also, products like furniture, electronics, software and apps can also be kept with the bank while taking out a loan, subject to pricing.
Besides, banks would also give loans against fish in ponds, garden trees and cattle.
The proposed law would pave the way for small and medium entrepreneurs to take out bank loans.