Implement law allowing use of movable assets as loan collateral: SMEs

Small and medium enterprise (SME) entrepreneurs have called for the implementation of the Secure Transactions (Movable Assets) Act, 2023, which enables the use of movable assets as collateral for bank loans.

The demand was raised at a workshop jointly organised by the SME Foundation and the International Finance Corporation (IFC), where the participants emphasised the law's potential to widen access to finance for SME businesses.

Martin Holtmann, country manager of the IFC, presided over the workshop, while SME Foundation Chairperson Md Musfikur Rahman attended as the chief guest, according to a press release.

Bangladesh Bank Deputy Governor Nurun Nahar also spoke at the event.

Speakers noted that many SME entrepreneurs, particularly those in rural and informal sectors, as well as women entrepreneurs, lack immovable assets such as land or buildings, which limits their ability to secure bank financing to start or expand their businesses.

A 2020 study by the Bangladesh Institute of Bank Management found that around 80 percent of SME entrepreneurs do not own immovable property, excluding them from formal banking credit.

To address this gap, the government enacted the Secure Transactions (Movable Assets) Act, 2023, which allows banks to accept movable assets, such as machinery or agricultural products, as collateral.

The SME sector currently contributes nearly 32 percent to Bangladesh's gross domestic product.

According to the Bangladesh Bureau of Statistics' 2013 Economic Census, there are more than 78 lakh cottage, micro, small, and medium enterprises in the country, accounting for over 99 percent of all industrial establishments.