Intellectual property, apps, software 'can be used' as bank loan collateral

In a significant move, the government is taking steps to revolutionise the collateral system by enabling the use of moveable assets as collateral for bank loans.

Currently, banks in Bangladesh primarily accept immovable properties as collateral for loans. However, if the proposed law is enacted, a total of 16 categories of moveable assets will be recognised as acceptable collateral for bank loans.

This progressive initiative aims to expand access to financing by providing individuals and businesses with alternative options for securing loans.

By broadening the range of eligible assets, the government seeks to promote greater financial inclusion, stimulate entrepreneurship, and facilitate easier access to credit for various sectors of the economy.

Once passed in the parliament, the law has the potential to unlock new opportunities for borrowers, especially those who may not possess immovable properties but possess valuable moveable assets.

The Cabinet on Thursday approved the final draft of the "Secured Transactions (Immovable Property) Act 2023" with Prime Minister Sheikh Hasina in the chair.

Briefing journalists, Cabinet Secretary Md Mahbub Hossain said knowledge and intellectual property, apps, software, gold, silver and other precious metals, shares, furniture, electronic goods, mechanical and non-mechanical vehicles, aquatic animals, wild animals, livestock, agricultural products, yearly allowances and funds stemmed from insurance policies will be considered immovable property.

He said that already some institutions give loans against immovable property such as cars, shares, fixed deposit receipts (FDRs). But these have lo legal basis. 

Banks in Bangladesh usually provide loans by keeping buildings and land as collateral. Many entrepreneurs do not get loans due to lack of adequate collateral. If this law is passed, it will be easier for merit-based entrepreneurs to get capital.

Md Mahbub Hossain said that an authority called Secured Transaction Registration Authority will be established. The immovable property must be registered with that authority which will determine the value of the property.

He said there was also a discussion on community clinic at the cabinet meeting with Prime Minister Sheikh Hasina in the chair.

He said the community clinic is a unique initiative in primary healthcare. It has been widely acclaimed at home and abroad. A resolution on the success of the community clinic was passed in the United Nations on May 16, where the prime minister's initiative was specially lauded.

It has been identified as Sheikh Hasina's initiative. The Cabinet has congratulated the premier for this. A few other issues were decided in the Cabinet meeting.