Bill placed in JS to allow fixed deposits, gold, movable assets as collateral for bank loans

The Secure Transactions of (Moveable Assets) Bill, 2023 was placed in the Parliament on Tuesday, aiming to bring movable property under the definition of collateral for bank loans.

Finance Minister AHM Mustafa Kamal placed the bill and it was sent to the respective committee for further examination. The committee was asked to submit its report within fifteen days.

If enacted, the new law will 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 ones can be taken as collateral for loans from banks and financial institutions.

However, the movable property must be registered for a mortgage. For this purpose, it has been decided to have 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 will reap benefits, and providing loans will 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 will be able to hold other floating assets to market value as collateral instead of tangible assets to borrow from banks.

As per 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 loan, subject to pricing.

Besides, the bank will also give loans against fish in ponds, garden trees, and cattle.

The proposed law would pave the way for the small and medium-level entrepreneurs to take bank loans.