Presenting movable assets as collateral for credit

CRIB, CBSL and Finance Ministry joint initiative to usher new era with revolutionary amendments to financial legislature

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THE Credit Information Bureau of Sri Lanka (CRIB) together with the Central Bank of Sri Lanka (CBSL) and the Finance Ministry, is reshaping the local financing landscape by introducing mortgage of moveable assets by rolling out major legislative reforms. Under the Secured Transactions (Amendment) Act No. 17 of 2024, CRIB is setting up a Secured Transaction Registry (STR) with technical assistance from the International Finance Corporation (IFC) of the World Bank Group, in order to establish a strong and effective credit infrastructure in the country. In this interview CRIB Director/General Manager Pushpike Jayasundera answers some of the most pressing questions that have been raised with regard to this highly anticipated development.

Why are MSMEs in Sri Lanka facing challenges with credit facilities?

Due to the nature of these businesses, micro, small and medium enterprises (MSMEs) in Sri Lanka have unduly constrained access to credit on commercial terms due to their lack of fixed assets that can be presented as collateral. MSMEs also often lack standardised credit policies unlike larger corporations, which can result in inconsistent credit assessment decisions that may lead to increased risk of bad debt. Additionally, the ability of debtors to impose delays through court action created leverage for settlements adverse to the interest of creditors

What were the existing regulations for moveable assets as collateral in banks and non-banking finance and leasing institutions?