Business Times

Relief and more access for SMEs to credit

By Quintus Perera

The biggest constraint for SMEs advancing in their businesses is the lack of opportunity for credit facilities as under normal circumstances credit is provided on collaterals and the lending institutions insist on immovable properties as collaterals.

That however will be an issue of the past after the Credit Information Bureau (CRIB) this week announced the formation of a ‘Secured Transaction Registry (STR) also known as Movable Assets Registry. Through this Registry movable properties could also be pledged as collaterals to obtain credit which would if properly administered and be a great help for SMEs.

At the launch in Colombo of the STR, it revealed that Secured Transactions have advantages for borrowers and lenders alike – transaction costs are lower and lenders do not need to gather as much information about borrowers.

Loans are transacted on unsecured lending such as borrower offers an unsecured promise to pay, the lender must rely on the borrower’s reputation or trust that the borrower will pay back the loan in order to have access to future loans. The mode of lending is the secured lending such as the promise to repay is backed by collateral that lenders can seize and sell in the event loan payments are not made as agreed. Collaterals can be real estate (immovable) or personal movable property such as inventory, machinery, account receivables, etc.

There are three obstacles that prevent movable property as collaterals – creation of security interest is difficult; the perfection of security interest – the public demonstration of their existence and the establishment of their priority - is not effectively possible and the enforcement of security interests is slow and expensive.

The main function of the Registry Office is to receive, maintain and disseminate information to enable creditors to make informed business decisions about lending secured by movable property, The services provided through the STR system would be: initial registration of notices; continuation, amendment and discharge (termination) of such notices and searching services for current and historical records in the system.

Gamini Karunaratne, Director, CRIB told the Business Times that the STR is to assist the SMEs and said that 80% of the industry consists of SMEs and MFI’s. He said that they have just launched this system and it will come into operation the moment the Act is gazetted.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
 
Other Business Times Articles
On arrival visas to continue till online visa plans mature
Textured Jersey to expand with aggressive growth
Sale and no more land leases for foreigners
Government to abide by Shangri-La agreement
BT Poll - Most people unhappy with EPF management
Hasty retreat by Nano cab!
COMMENT - Online visas could hurt tourism
FEATURE - Shot-gun regulations come under fire by industry; SEC urged to consult and regulate
Ceylon Assets Management to launch two more new funds
Strategic Risk Solutions get vital assignment at Hemas Hospitals Chain
Pensions debate at the Sunday Times Business Club meeting
BOI, Labour officials 'save CEO's life'
Corporate governance message must be taken to every part of the country: SLID President
International view of key economic drivers for Sri Lanka
Relief and more access for SMEs to credit
'Move forward' on CEPA, add services, investment : Pakistan HC
Commercial Bank introduces tri-lingual mobile application
Fitch assigns 'B+(lka)' / Stable to Entrust's Multi Finance
CB’s $125 mln in new dollar bonds to settle maturing bonds
Pawan Danavi to add 10.2 MW wind to SL in 2011
Heladiv grows tea exports in Russia, Iraq and Iran
Triple bottom-line – finding that sweet spot
CAMS offers intelligent performance solutions
Microsoft Sri Lanka connects communities across the country
ICMA Australia seminar on ‘Upswing Economies’
PCH firm ups human resource skills for better results
Fonterra enhances product testing capabilities in Sri Lanka
Huge credibility issues over state control of EPF
Govt. drafts new employment framework
Eight lucky winners of Coke competition to get Swiss holiday
CASA Colombo wins best interior design from Bloomberg
Sri Lankan remittances through BOC cross Rs. 108 billion
President assures justice to protesting 3-wheel taxis
Cloning the Padeniya rubber cooperative
CEPA discussion on poverty issues
Horizontal Inequality: does group inequality matter?
Small growers of flowers plead for state recognition

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 1996 - 2011 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved | Site best viewed in IE ver 8.0 @ 1024 x 768 resolution