Secured Transactions Registry: Role of financial institutions

At this opportune moment I am prompted in giving an insight and sharing some of my thoughts and expertise for the information of all stakeholders towards assisting the MSME inclusive of many ‘startups’ in availing facilities from Banks and Financial Institutions.

- By M.C.V. Rajanathan

The Secured Transactions Registry will be a major risk mitigating mechanism for the Financial Institutions, entrusted with the responsibility of assisting the MSME Sector. The accessibility of microfinance by the MSME sector is generally considered difficult due to their inability to provide acceptable collateral which compels them to seek the assistance of money lenders.

Movable collateral

There have been several news items in the media with regard to the acceptance of movable assets as collateral by banks to secure credit facilities with the implementation of the (STR), which will compel the banks to accept movables.

There appears to be some misconception as there is an impression among a section of the general public that banks are not accepting movable assets as collateral. As a personality with substantial exposure in this area of banking especially the Management and Operation of collateral, I could state with responsibility, Banks, have been accepting movable assets as securities and continue to do so in securing their exposures in the absence of the STR. Facilities amounting to billions of rupees are currently secured against moveables. The classification of movables are defined as any asset which could be physically moved from location to location, hence needless to state it is a major risk for the financier. This also includes certain types of machinery which are easily removables